The hashrate has now dropped to 5.25 GH/s for the network but the difficulty has not dropped with the hashrate drop. Why is that? Is that by design?
Changes every 720 blocks.
Seems to me that it is very unresponsive. A block has to be added to the block chain in order to verify the transactions within it. 720 blocks, if they were being generated every 2 minutes, would be one day; but because the difficulty remains high even as the network hash rate drops, isn't it possible those 720 blocks could be generated in as long as _several_ days before the difficulty re-adjusts ? What is the philosophy behind such a rather delayed response to the network hash rate ?
Difficulty, revisitedSatoshi told us, and we have quoted before:
In the absence of a market to establish the price, NewLibertyStandard's estimate based on production cost is a good guess and a helpful service (thanks). The price of any commodity tends to gravitate toward the production cost. If the price is below cost, then production slows down. If the price is above cost, profit can be made by generating and selling more. At the same time, the increased production would increase the difficulty, pushing the cost of generating towards the price.
now what has happened with other currencies, is that they have changed the special formula from "If the price is below cost, then production slows down."
through short diff changes and things like kgw/dgw they have changed it to "If the price is below cost, then production cost falls"
which has killed them, or made it hard for them to survive
whereas with us we have the special formula from satoshi.