Network Difficulty

One of the concepts that makes Bitcoin run smoothly is network difficulty. For Bitcoin transactions to be confirmed and for new Bitcoins to be mined, blocks must be solved. To keep the release of new Bitcoins and transaction confirmations consistent, the blocks need to be solved at a fairly regular time interval. The network accomplishes this by adjusting the network difficulty.

The network difficulty is increased by an algorithm to make it so a block is solved every ten minutes on average. Every two weeks, the algorithm adjusts the difficulty to adjust for increases or decreases in network has power to reach this target. Since Bitcoin's inception, the network difficulty has only increased. Not only has it always gone up, but it is increasing at an exponential rate. See the graph below.

There is an interesting side-effect of the fact that the network only adjusts the difficulty once every two weeks. New miners are coming online so rapidly, that the hashpower by the end of the two week period has reached a point where blocks are being solved every seven, eight, or nine minutes instead of every ten minutes. These periods of rapid block-solving will result in all bitcoins being mined ahead of the predicted year 2045.

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