This is really Part 3 of this earlier question.
Given that the QT client is hard coded to never adjust difficulty more (or less than) a factor of 4...
- What realistic scenario would cause the difficulty to decrease by a factor of 4?
If the hashrate were to decrease by a factor of 4, then that means current miners are trying to keep up with a difficulty that is incredibly hard given their relatively weak horsepower.
When network hashrate drops this way, I envision:
- Transaction confirmations will take a very long time
- The interval between blocks would get exceptionally long
- It will take a very long time until 2016 blocks are mined before the target is adjusted back.
- It is relatively easy for the attacker to turn on his hardware at the 2017th block and DOS the network again.
Bottom line, I doubt the -4 difficulty would ever be reached... but could be exploited for malicious purposes.
So assuming a big loss in mining power occurs:
How much horsepower must be added and then lost for a 4x difficulty to be realized?
How long will it take a transaction to be included in a block/confirmed (worst case)?
How long will it take for the chain to return itself to normal levels?
- Are the effects of a "high horsepower user" who intentionally switches on, then off a massive mining rig enough to disrupt Bitcoin network operations? To what end?
Disclaimer: I know that 4x is not the only disruption that can occur, since lesser magnitude attacks would be equally annoying but want to forecast worst case scenarios.