I don't believe ETH difficulty is real. I have two grounds for it:
1) ETH is not a GPU coin for a long time
2) Difficulty is manipulated for some reason
Difficulty is not protecting miners now. It fails as a protective mechanism and leads to decision making.
Full disclosure: i'm not al altcoin guru, i haven't even read ethereum's whitepaper, and whenever i accept ETH i usually use MEW... However, i do know a thing or two about bitcoin (and altcoins cloned from bitcoin's source, like LTC, DOGE, NLG,...), so some of my assumptions might actually be wrong....
But... If my assumption that ETH's difficulty algorithm works more or less the same way as bitcoin's, i'd say it will be pretty hard to manipulate the difficulty of a high-diff network. In order to push the difficulty upwards, you'd need to broadcast more valid blocks... And in order to find a valid block, you'd need to have sufficient hashrate. So in case you need to push the difficulty upwards, you'd need a lot of hashrate. In this case, the difficulty wouldn't be manipulated or artifically high.... It would be backed with the hashrate you added to the network.
The opposite can potentially be done... If you have a large mining farm, and you focus on a low-diff coin, you can potentially manipulate the difficulty downwards by mining at full hashrate but not broadcasting part of the the valid blocks you find... This would keep the difficulty artificially low, eventough i can not find any valid reason to do such a thing.
I know ETH isn't a GPU coin, that's why i talked about ASIC's in my first post. But the fact that ETH's POW algo can be mined with an ASIC actually increases the potential of people keeping on mining even if the diff is so high they can't make any more profit. At least, that's what my gut feeling tells me.
Why? Well, i personally think that somebody who is running GPU rigs actually HAS to know what he's doing. He has to order the right GPU's, order risers, make sure the PSU is suitable, think about motherboards, compile mining software,... If a GPU miner can no longer make any profit, i believe he'll be able to switch to a different coin, and even a different algorithm in a very short time.
An ASIC owner nowadays just has to order an ASIC, plug it in, visit a gui served by the LAMP stack on the controller incorporated in his ASIC. He doesn't have to know anything on a technical level, he just has to plug everything in, and then enter the details he sees on his pool's FAQ.
Even if the ASIC owner has sufficient technical knowledge, in case of a price dip, he can only switch to coins using the same POW algo, limiting his choice drastically... IMHO, this would increase the odds of him just keep mining on the same chain, since his options are not that much anyways.
Like i said: this is my personal opionion and gut feeling... I don't have a lot of experience mining alt's, so my assumptions *can* be wrong
