To summarize, your proposal is that there are no more difficulty bits; rather than all miners working to produce blocks with a hash that is below a given number, they all work to produce the lowest hash they can within 10 minutes. Then whoever produced the lowest hash 'wins' and they send out the corresponding block which every other miner accepts in the chain.
Here's how I see it working in practice:
- Miners generate hashes for 9.5 minutes and then all start sending out their hashes ahead of the 10 minute deadline, because nobody wants to be 'late' for the 10 minute deadline, which would likely mean that their hashes would be rejected.
- Some miners miss some messages and so the 'winning' hash is not really well agreed-upon; different subsets of the network believe that the winning hash was different. So some number of 'winning' blocks get generated by each miner subset that saw a different winner.
- This process repeats itself and the block chain is fragmented endlessly
The thing to realize is that the existing bitcoin difficulty is meant to cause blocks to take on average 10 minutes to generate. This gives plenty of time for a generated block to propogate before other miners generate their own blocks and the block chain fragments. With your proposal, the time for blocks to propogate before fragmentation is the time between all of the hashes being sent out and miners deciding that they 'won' and send out blocks. I feel like this increases the chances of fragmentation greatly.
I think the effect would be the same as a difficulty that resulted in a block being generated on average every minute. Very frequently multiple miners at the same time would think they have the next block and would send it out, resulting in lots of fragmentation of the block chain.
