Paper about Bitcoin / Namecoin difficulty control

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domob
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Paper about Bitcoin / Namecoin difficulty control

Post by domob »

I've written a paper giving a statistical analysis of Bitcoin's (and thus also Namecoin's) difficulty control algorithm: http://link.springer.com/article/10.100 ... 015-0347-x The unofficial postprint is also available without paywall from my website, http://www.domob.eu/research/DifficultyControl.pdf.

The paper suggests an 'improved' difficulty update mechanism, that ensures much better stability of block times over longer periods of exponential hash rate growth. This could be useful for linking the name expiration period in Namecoin to a more stable real time. While the idea is definitely interesting from an academic point of view, note that it is not very practical as an actual solution for Namecoin. One could, instead, use block timestamps to define name expiration.

EDIT: I should probably have added the abstract here as well:
Crypto-currencies like Bitcoin have recently attracted a lot of interest. A crucial ingredient into such systems is the “mining” of a Nakamoto blockchain. We model mining as a Poisson process with time-dependent intensity and use this model to derive predictions about block times for various hash-rate scenarios (exponentially rising hash rate being the most important). We also analyse Bitcoin’s method to update the “network difficulty” as a mechanism to keep block times stable. Since it yields systematically too fast blocks for exponential hash-rate growth, we propose a new method to update difficulty. Our proposed method performs much better at ensuring stable average block times over longer periods of time, which we verify both in simulations of artificial growth scenarios and with real-world data. Besides Bitcoin itself, this has practical benefits particularly for systems like Namecoin. It can be used to make name expiration times more predictable, preventing accidental loss of names.
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johnc
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Re: Paper about Bitcoin / Namecoin difficulty control

Post by johnc »

it should retarget every x hours and x days or so and allow for higher ups and down of difficulty. New altcoins have a variety of algorithms for retarget. We don't want to retarget very often as that's prone to malicious peers faking the time. But some kind of mechanism should be able to lower the difficulty if no block has been found in something like 10 hours or if more than 60 blocks have been found in 1 hour.

All with the goal of having the blocktime between the renewals be as acurate as possible to 1 year.

biolizard89
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Re: Paper about Bitcoin / Namecoin difficulty control

Post by biolizard89 »

Thanks for posting Daniel.
Jeremy Rand, Lead Namecoin Application Engineer
NameID: id/jeremy
DyName: Dynamic DNS update client for .bit domains.

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indolering
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Re: Paper about Bitcoin / Namecoin difficulty control

Post by indolering »

Congratulations Domob!
DNS is much more than a key->value datastore.

drllau
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Re: Paper about Bitcoin / Namecoin difficulty control

Post by drllau »

Wonder if the variation might be applied to side-chains with faster update turn-around. Essentially everyone uses a global set of ledgers but it takes 15 minutes to collate and mine the next block. But if broken down into subsets with larger "clumps" of closely related transactions (think stoshi dice) then that clump might get acknowledged every say 1 minute whilst being represented a single transaction in the global level blockchain (cutting down on the overhead, potentially allowing better scaling).

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