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

[Scott Roberts]

The current DA is only sufficient if the coin has the highest
hashpower. It's also just really slow.  If miners somehow stick with
SegWit2x despite the higher rewards in defecting back to bitcoin, then
bitcoin will have long block delays. High transaction fees will
probably help them defect back to us. But if SegWit2x manages to be
more comparable in price than BCH (despite the futures), hashpower
could very well oscillate back and forth between the two coins,
causing delays in both of them. The first one to hard fork to fix the
difficulty problem will have a large advantage, as evidenced by what
happens in alts.   In any event someday BTC may not be the biggest kid
on the block and will need a difficulty algorithm that alts would find
acceptable. Few alts use anything like BTC's because they are not able
to survive the resulting long delays.   I am recommending BTC
developers watch what happens as BCH goes live with a much better
algorithm, in case BTC needs to hard fork for the same reason and
needs a similar fix. Ignore the trolls.

On Thu, Nov 2, 2017 at 7:39 PM, CryptAxe <cryptaxe at gmail.com> wrote:
> 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 at 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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