Difficulty is a parameter of the algorithm used for cryptocurrency mining. It determines how difficult it is to mine a new transaction block and earn its the block reward.

It is usual for the difficulty to be automatically adjusted by the algorithm in order to keep the time between blocks steady at a set average figure. This means that as more hashing is contributed to the network (more computing power performing the Proof of Work calculations) the difficulty will rise to prevent the rate at which blocks are being found from also going up.

For example, in Bitcoin’s Proof of Work miners must perform hash calculations until they find one with a value below a given figure. Difficulty is therefore determined by raising or lowering this value, in order to keep the average time between blocks at the target period of 10 minutes.

There are various different types of difficulty readjustment algorithms used in various alt coins. The time period between each difficult readjustment can also be varied.

One common method for difficulty readjustment is called Kimoto’s Gravity Well, which was first implemented by Megacoin and named after that coin’s lead developer. It was designed to solve problems caused by multipool mining (follow the link for more info)


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