What exactly does difficulty do/mean?

[Chrithu]

I just wondered that. I see it increase and know it somehow makes mining harder to keep the blockrate at 10 minutes per block.

But how does it do it?

Does it

a) make it harder to create the actual hashes thus making the hardware take more time to create them?

or

b) increase the total number of hashes that can be created thus decreasing the percentile of the hashes that are valid for the current block?

Related question: Can hardware become outdated because it it will not be able to create hashes anymore as difficulty rises? Or does it's usefulness purely stem from the number of hashes it is able to create per timeframe?

[DrG]

It's more like B.  You will notice CPUs will still make the same measly KH/s, GPUs still makes the same MH/s.  But if you mine on a pool the shares they submit would be worth to nothing, less than 1 satoshi each.  Some of the high end ASIC machines are putting out 100k hashes per minutes now which would make your classic 5830 cry

An easy anology would be every time the difficulty jumps it's like needing to pick an extra number to win a lottery.  Picking 6 numbers is difficult.  Picking 7 is even harder.

[tuanvie]

whether to mine the miners crowded pool will quickly get results?
This has always been my question, and the opinion of my friend 

[Soappa]

whether to mine the miners crowded pool will quickly get results?
This has always been my question, and the opinion of my friend 

Joining a bigger pool won't increase your miner's hashrate or make your expected profit higher, but it will lower the variance of your profit.

[Soappa]

I just wondered that. I see it increase and know it somehow makes mining harder to keep the blockrate at 10 minutes per block.

But how does it do it?

Does it

a) make it harder to create the actual hashes thus making the hardware take more time to create them?

or

b) increase the total number of hashes that can be created thus decreasing the percentile of the hashes that are valid for the current block?

A higher "difficulty" is associated with a lower "target". And a block is considered valid if it has a hash value lower than the target value.
So, it is less likely to get a valid block with each of your hashes when difficulty is higher.

For example, current difficulty is 10.45G (https://blockexplorer.com/q/getdifficulty).
The corresponding target (https://blockexplorer.com/q/hextarget) is

Code:

0000000000000000692842000000000000000000000000000000000000000000

So, the hash of all blocks find now need to be smaller than that value.
Block 302883 is:

Code:

00000000000000002fe31fd66a9d82b1e204d056b118f86a314af955d91f51c2

Block 302884 is:

Code:

00000000000000001921a0ebf2cf6684c37a620a68987cb945df8e87676b360f