DigiShield misunderstandings

Even tho’ the DigiByte DigiShield is not a fresh phenomenon anymore, and even has bot installed on Dogecoin, there are still some misunderstandings regarding its functionality. DigiShield wasgoed developed spil a partial solution for multi-coin switching mining pools. Thesis multipools are a threat to any altcoin with a low difficulty te relation to its network hashrate.

Mining and multipools

The network hashrate represents the total computational power te a network. The network processes fresh transactions ter so-called “blocks” which requires solving computational puzzles referred to a mining. The difficulty of the puzzles adjusts to computational power ter the network te order to spread blocks evenly overheen time, matching a predefined target time. By default, this difficulty would adjust after a certain number of blocks mined. The rise of multipools, however, caused a problem with this process.

Assume a network has a total hashrate of 50 GH/s and a fair difficulty of 500. If a multipool with a hashrate of 50 GH/s would all of a sudden join the network, the total hashrate would instantaneously shoot up to 100 GH/s. This would permit many coins to be mined at toughly half of their target time before the difficulty increases. The multipool quickly sells most of the mined coins, causing the price to druppel. Once the difficulty ultimately increases to 100, the multipool leaves and the network is left with only 50 GH/s to tackle the more difficult puzzles. Ter this example, it would then take harshly dual the target time to accomplish a block and receive fresh coins, which also decreased ter value due to the multipool selling. Ter extreme cases, this script could lead to a blockchain getting “stuck” i.e., not being able to solve a block for extended periods of time.

Effects of DigiShield

DigiShield adjusts the difficulty of a coin inbetween blocks, or every 60 seconds ter the case of DigiByte and Dogecoin. This is very effective te preventing long times to solve a block, albeit it does not prevent a coin from being a profitable target for multipools spil still believed by some. Assume the coin te the previous example has a block target time of 60 seconds and an equal difficulty retargeting time. If the multipool joins when the network retargets to a low difficulty, the time to solve a block still halves to toughly 30 seconds. The multipool could thus mine one or two blocks before the difficulty adjusts again. This cycle would simply repeat more often, spil the coin remains a relatively more profitable target when the difficulty is low. Profitability is only slightly diminished due to the fact that it will not be possible to get many coins te a single run, but by far the main benefit of DigiShield is a better balance te block solving times.

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