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Finding a bitcoin block is like picking a number out of a hat. A hash is like reaching in the hat and picking out a single number. All miners on the network are reaching in the hat over and over, as fast as they can, hoping to pick out the right number.
When a miner picks out the right number, observers of the network, like us, can only see that the miner holds the right number. We cannot see how many reaches the miner made into the hat in order to find the right number. Sometimes miners get luckier than expected, pulling the right number out of the hat after only a few reaches. Sometimes miners make as many reaches as we'd expect (or more) before pulling out the right number. It could've taken the miner one reach, two, or far more than a trillion trillion reaches. We, the network, only know that the miner holds the right number and how long it took them to pull it out of the hat.
The bitcoin network is designed so that it takes miners, on average, 10 minutes to pull the right number out of a hat after a new hat is introduced. If for most recent hats miners pulled the right numbers out faster than expected, that probably means bitcoin miners made more reaches into the hat per second than expected. That is, miners probably increased their reachrate.
We say probably increased their reachrate, because it's possible miners didn't increase their reachrate at all. Miners might just be on a lucky streak. Lucky streaks don't last forever though, and the longer a lucky streak lasts, the more likely it is that miners have really increased their reachrate.
So we can never with 100% confidence say what the hashrate, or reachrate in our metaphor, is. We can only observe how fast miners are finding blocks and make informed guesses about the network's hashrate based on that. The longer we observe miners doing anything though, the better our guesses about miners get. The longer we observe miners finding blocks faster or slower, the more confident we can be that the hashrate has probably increased or decreased.
I like that analogy. So, where does mining difficulty fit into that?
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It's more accurate to say "picking one of the right numbers" which has to be below a certain threshold. Difficulty is how low that threshold is. Imagine a hat with a million numbers in it. Its much easier to find one < 100,000 than finding one <10
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Difficulty is the threshold of correct number. If there is a realized reachrate of 1 per 10 minutes then the difficulty is 100% - any number is a correct number. If the realized reachrate is calculated as 10 per 10 minutes then the difficulty is the top 10% of numbers in the hat... and so on.
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mining difficulty
natural selection
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Very nice metaphor!
We cannot see how many reaches the miner made into the hat in order to find the right number.
This is probably the most important aspect to remember when discussing hashrate; the number is a statistical approximation.
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But if we don’t tell people that it’s ultra sophisticated computers solving maddeningly complex math equations, we don’t get to sound… like you know…all smart and stuff.
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I did that (buying hashrate) in 2014-2015 using GHASH platform, from people with lower electricity cost than mining profits.
Nowadays I think is hard to achieve that level.
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Maybe this is the service that Alex need https://rigly.io/fixed-return ... LN payments, buy hashrate, long time vs shot time preferences.
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Cool analogy
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