Anchoring and Adjustment is a mechanism in cryptocurrency networks used to adjust the difficulty of mining new blocks. The two components, anchoring and adjustment, are closely related: anchoring helps to secure the network while adjustment ensures that block production remains consistent over time.
Anchoring was first proposed in Satoshi Nakamoto’s 2008 Bitcoin whitepaper as a solution for the problem of “time warp attack”. In this type of attack, an attacker can manipulate timestamps on mined blocks in order to make it appear that they solved them earlier than their competitors. By anchoring each block with a cryptographic hash from one or more previous blocks (known as parent hashes), an attacker would need to recompute all those hashes before being able to successfully manipulate the timestamp on a given block. This makes time warp attacks significantly more difficult and costly for attackers compared with networks without anchoring mechanisms.
Adjustment works by periodically changing the difficulty level required for miners to produce new blocks based on factors such as how many miners are actively mining at any given moment and what their computing power is collectively capable of producing within a certain amount of time. This ensures that regardless of how much computing power is available or how few miners there may be at any given moment, mining activity remains consistent across different periods throughout the network’s lifetime.
The combination of these two components makes it possible for cryptocurrency networks to remain secure against malicious actors while also maintaining stability in terms of both cost effectiveness (in terms of resources) and speed efficiency (in terms of transaction processing times).
