What Is Hashing?


Hashing is a process of generating a fixed-size output from an input of variable size by using mathematical formulas known as hash functions. There are both conventional and cryptographic hash functions, with the latter being at the core of cryptocurrencies. These functions enable blockchains and other distributed systems to achieve high levels of data security and integrity.

Hash functions are deterministic, meaning that given the same input, they will always produce the same output. This output is also referred to as a digest or hash.

Cryptocurrency hashing algorithms are designed to be one-way functions, meaning that they are difficult to reverse without significant computing power and resources. It is relatively easy to create an output from the input, but going in the opposite direction to generate the input from the output alone is a challenge. The security of a hashing algorithm is typically measured by how difficult it is to find the input, with a more secure algorithm requiring a higher degree of difficulty.

How Does a Hash Function Work? 

Hash functions are used to produce outputs of varying sizes, but the possible output sizes for each algorithm remain fixed. For example, SHA-256 will always produce a 256-bit output, while SHA-1 will only generate a 160-bit digest. The hash itself is a set of letters and numbers.

Note that a slight difference in the input, such as the casing of the first letter, results in a completely different hash value. Despite this, for SHA-256, the output will always have a fixed size of 256 bits (or 64 characters), regardless of the input size. Furthermore, it doesn't matter how often the two words are run through the algorithm; the output will always be the same. However, the outputs will be different if the same inputs are used with the SHA-1 hashing algorithm.

It's important to point out that SHA stands for Secure Hash Algorithms, which is a set of cryptographic hash functions that includes SHA-0 and SHA-1 algorithms, as well as the SHA-2 and SHA-3 groups. The SHA-256 algorithm is part of the SHA-2 group, along with SHA-512 and other variations. Presently, only the SHA-2 and SHA-3 groups are regarded as secure.

What Is Hashing Significance?

Hashing has various use cases, from analyzing large files and managing data to information security applications such as message authentication and digital fingerprinting. Cryptographic hash functions play a crucial role in Bitcoin's mining process and the creation of new addresses and keys. The power of hashing becomes evident when dealing with vast amounts of information. Hash functions condense input into an output (hash), enabling data verification without the need to store large amounts of data. Blockchain technology benefits from hashing, as it links and condenses transactions into blocks, creating a blockchain. The Bitcoin blockchain heavily relies on hashing in several operations, mostly in mining, to produce cryptographic links between each block. In summary, hashing is a crucial part of cryptocurrency protocols to achieve data integrity, security, and immutability.

Hash Functions 

Hash functions have many applications, including data management, database lookups, and large file analyses. In information security, cryptographic hash functions are widely used for digital fingerprinting and message authentication. Cryptographic hash functions are essential in the mining process of Bitcoin, and they also play a crucial role in creating new keys and addresses.

Hashing is particularly useful when dealing with massive amounts of data. By running a large file or dataset through a hash function, one can quickly verify the accuracy and integrity of the data using the output. This is possible due to the deterministic nature of hash functions, where the input will always result in a simplified and condensed output or hash. This approach eliminates the need to store and remember large amounts of data.

For blockchain technology, hashing is particularly relevant. The majority of cryptocurrency protocols depend on hashing to condense and link groups of transactions into blocks and produce cryptographic links between each block, creating a blockchain.

To be considered secure, a cryptographic hash function must meet three properties: collision resistance, preimage resistance, and second preimage resistance. 

  • Collision resistance means that it is impossible to find any two distinct inputs that produce the same output. 
  • Preimage resistance means that it is impossible to revert the hash function and find the input from a given output. 
  • Second-preimage resistance means that it is impossible to find any second input that collides with a specified input.

Collision Resistance

A hash function is collision-resistant until someone finds a collision where different inputs produce the same hash. Collisions will always exist for any hash function because the possible inputs are infinite, while the possible outputs are finite. Hash functions are considered collision-resistant when the probability of finding a collision is low enough to require millions of years of computation. Some of the hash functions that meet this standard include SHA-256.

SHA-0 and SHA-1 groups are no longer secure because collisions have been found. In contrast, SHA-2 and SHA-3 groups are considered resistant to collisions.

Cryptographic hash functions use cryptographic techniques, and breaking them requires numerous brute-force attempts. To revert a cryptographic hash function, it is necessary to guess the input by trial and error until producing the corresponding output. However, different inputs may produce the same output, causing a collision.

Preimage resistance 

One-way functions and preimage resistance is a property of hash functions that ensures that it is nearly impossible to determine the input that produced a particular output. This is related to the concept of one-way functions, where it is easy to calculate the output but difficult to compute the input based on the output.

Note that preimage resistance is different from collision resistance because, in the former, an attacker would be trying to guess the input based on a given output. In the latter, a collision occurs when two different inputs produce the same output.

Preimage resistance is valuable for data protection because a hash of a message can prove its authenticity without revealing the message itself. 

Second-preimage resistance 

The second-preimage resistance is a property that falls between the two other properties. It involves finding a specific input that generates the same output as another already known input. A second-preimage attack is like finding a collision, except that one searches for an input that produces the same hash as a specific input rather than finding two random inputs that generate the same hash.

Since a second-preimage attack always implies a collision, any collision-resistant hash function is also resistant to second-preimage attacks. However, a collision-resistant function can still be vulnerable to preimage attacks since it involves finding a single input from a single output. Therefore, preimage resistance is a crucial property of hash functions and is often used to protect data. Many service providers and web applications store and use hashes generated from passwords rather than the passwords in plaintext. This way, they can prove the authenticity of the message without disclosing the information.


Bitcoin mining involves multiple steps that require the use of hash functions. These steps include verifying balances, connecting transaction inputs and outputs, and hashing transactions within a block to form a Merkle Tree. However, one of the main reasons why the Bitcoin blockchain is secure is because miners need to perform many hashing operations to discover a valid solution for the next block.

To generate a hash value for their candidate block, a miner has to try many different inputs. Essentially, miners will only validate their block if they can produce an output hash that begins with a specific number of zeros. The number of zeros determines the mining difficulty, which varies according to the hash rate invested in the network.

The hash rate signifies the amount of computer power invested in Bitcoin mining. If the network's hash rate rises, the Bitcoin protocol will automatically adjust the mining difficulty, ensuring that the average time required to mine a block stays around 10 minutes. Conversely, if numerous miners cease mining, reducing the hash rate significantly, the mining difficulty will be adjusted to make mining easier until the average block time returns to 10 minutes.

It's worth noting that miners don't need to find collisions since they can generate multiple hashes that qualify as valid output (with a particular number of zeros at the beginning). Thus, many possible solutions exist for a given block, and miners need to locate only one of them based on the threshold established by the mining difficulty.

Since Bitcoin mining is a cost-intensive process, miners have no incentive to cheat the system because doing so would result in significant financial losses. The more miners participate in a blockchain, the larger and more robust it becomes.


For those interested in blockchain technology, cryptographic hash functions are vital to understanding. These algorithms offer security and authentication when combined with cryptography, making them highly versatile when dealing with large volumes of data. Hash functions play a crucial role in nearly all cryptocurrency networks. Understanding their properties and working mechanisms is essential in computer science.

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