Excerpts from The Fiat Standard by @saifedean “As the value of the network grows, the difficulty adjustment raises the cost of committing the transactions to the network, making it more expensive to attack the network with fraud, inflation, or disputes. The difficulty adjustment ensures the security of the network by ensuring the cost of mining a new block is roughly equal to the mining block reward. As the price of bitcoin rises, the energy resources dedicated to mining bitcoin increase, and the value of an attack on the bitcoin network, in the form of inflation or fraud, also goes up. The difficulty adjusting upward ensures that the cost of submitting a block for the network nodes rises commensurately as well.”
