
August 03, 2012, 11:04:34 AM Last edit: August 03, 2012, 09:15:23 PM by socrates1024 

What's the optimal setting for the puzzle difficulty? Is 10 minutes between blocks correct?
Ideally, there should be one stale block for every feeearning block. This strikes the best balance between two performance goals:  (Latency) the chain should grow quickly  (Convergence) the network should settle quickly
Here's an easy way to maintain the proper difficulty setting. Miners should include in each block a set of novel stale blocks with shorter height. For every feewinning block, we decrease the difficulty. For every stale block, we increase the difficulty. It's clear that in the steady state with constant hashpower, this scheme results in two proofsofwork for every block in the chain.
Notice it would no longer be necessary for miners to report timestamps, and the parameter "10 minutes" would be eliminated altogether. The only remaining parameter is a 'gain' for how much to adjust the difficulty per block.
tl;dr: First place wins a prize. Runnersup receive an honorable mention.
[edit] I originally used the wrong term "orphan block" when I meant "stale block", thanks sipa
