Re: [bitcoin-dev] Bitcoin Cash's new difficulty algorithm

[CryptAxe <cryptaxe@gmail.com>]

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Is there an issue with the current difficulty adjustment algorithm? It's
worked very well as far as I can tell. Introducing a new one seems pretty
risky, what would the benefit be?

On Nov 2, 2017 4:34 PM, "Scott Roberts via bitcoin-dev" <
bitcoin-dev@lists.linuxfoundation.org> wrote:

> Bitcoin cash will hard fork on Nov 13 to implement a new difficulty
> algorithm.  Bitcoin itself might need to hard fork to employ a similar
> algorithm. It's about as good as they come because it followed the
> "simplest is best" route. Their averaging window is probably
> significantly too long (N=144). It's:
>
> next_D = sum (past 144 D's) * T / sum(past 144 solvetimes)
>
> They correctly did not use max(timestamp) - min(timestamp) in the
> denominator like others do.
>
> They've written the code and they're about to use it live, so Bitcoin
> will have a clear, simple, and tested path if it suddenly needs to
> hard fork due to having 20x delays for the next 2000 blocks (taking it
> a year to get unstuck).
>
> Details on it and the decision process:
> https://www.bitcoinabc.org/november
>
> It uses a nice median of 3 for the beginning and end of the window to
> help alleviate bad timestamp problems. It's nice, helps a little, but
> will also slow its response by 1 block.  They also have 2x and 1/2
> limits on the adjustment per block, which is a lot more than they will
> ever need.
>
> I recommend bitcoin consider using it and making it N=50 instead of 144.
>
> I have seen that any attempts to modify the above with things like a
> low pass filter, starting the window at MTP, or preventing negative
> timestamps will only reduce its effectiveness. Bitcoin's +12 and -6
> limits on the timestamps are sufficient and well chosen, although
> something a bit smaller than the +12 might have been better.
>
> One of the contenders to the above is new and actually better, devised
> by Degnr8 and they call it D622 or wt-144.It's a little better than
> they realize. It's the only real improvement in difficulty algorithms
> since the rolling average.  It gives a linearly higher weight to the
> more recent timestamps. Otherwise it is the same. Others have probably
> come across it, but there is too much noise in difficulty algorithms
> to find the good ones.
>
> # Degnr8's D622 difficulty algorithm
> # T=TargetTime, S=Solvetime
> # modified by zawy
> for i = 1 to N  (from oldest to most recent block)
>     t += T[i] / D[i] * i
>     j += i
> next i
> next_D = j / t * T
>
> I believe any modification to the above strict mathematical weighted
> average will reduce it's effectiveness. It does not oscillate anymore
> than regular algos and rises faster and drops faster, when needed.
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