Hashing or hash is a common term when discussing blockchain technology. Hashing refers to the transformation and generation of input data of any length into a string of a fixed size, which is performed by a specific algorithm. In particular, the Bitcoin hash algorithm is SHA-256 or Secure Hashing Algorithm 256 bits. This algorithm is a one-way cryptographic function as the original data cannot be retrieved via decryption.
So how does hashing work and why is hashing used in blockchain technology? The short answer is that the implementation of a cryptographic hash function is beneficial to prevent fraudulent transactions, double spending in blockchain, and store passwords. What about the long answer? Well, read on to find out!
How Does Hashing Work
So what is a hashing algorithm in blockchain, and how does it work? In a nutshell, a hashing algorithm takes an infinite number of bits, performs calculations on them, and outputs a fixed number of bits. Regardless of the input data’s length, the output will always be rectified. As a result, the original data is called input, and the final transformation is called a hash. Today, many hashing algorithms differ only in the way information is processed.
To fully comprehend what hashing is about, it’s essential first to understand the data structure. A data structure is a specific way of storing data that consists of two key elements: pointers and linked lists. Pointers are variables referring to other variables, so they act as indicators that show the way to the right location. Besides, it provides the address of the next block in the chain. Linked lists, on the other hand, make up a sequence of the nodes that are connected with the help of pointers.
Thanks to hashing in the blockchain, each block is assigned an original identifier, which will entail the irreversible consequences of changing the blockchain. The block is identified by information included in the header of the block, consisting of details such as:
- the version number of the blockchain
- UNIX timestamp
- hash pointers
- nonce, which is the value the miners need to create a block
- a hash of a Merkle root
All these elements are needed to create the block. So when a hash happens to the blockchain, the data will be converted into a unique string within a block.
Why is Hashing Used in Blockchain
Every block contains a hash of the previous block (parent block) except for a Genesis block. Imagine a string of blocks with hashes of parent blocks. If the information in one of these blocks is changed, it affects all other chain blocks. However, as the network grows, changing hashes across all the blocks becomes practically impossible. Therefore, the hashing process is necessary for the blockchain, ensuring the uniqueness and originality of each element of the system.
Immutable and trustworthy data is one of the blockchain’s core properties, making it valuable and giving colossal potential to the blockchain. The information always remains authentic, thus determining the integrity of the blockchain.
How to Solve a Hash?
To solve a hash, it begins with solving complex mathematical problems containing data in the block header. But before a miner initiates the process, they’ll need to carry out a trial-and-error process to decide which string to use as a nonce.
When a nonce is identified, miners will focus on the nonce (a string number) that is related to the previous block’s hashed content. In order for a hash to be considered successful, the new hash needs to be less than or equal to the target hash. And in exchange, the miner will get a reward to add the block into the blockchain.
What Are Cryptographic Hash Functions?
Cryptographic hash functions are characterized by several properties making them very useful when employed in the cryptographic sphere.
1. The result of a hash function is always identical. This characteristic is called deterministic. Regardless of how many times you enter the same message, the output will be the same after the hash function is applied. However, the slightest change in the input data (‘Article’ instead of ‘article’) changes the result completely.
2. It features fast computation as low speed would make the system inefficient.
3. Preimage resistance feature in hash functions makes it computationally infeasible to determine the input from the hash value. Therefore, miners can only compare the result until a match is found.
Does Hashing Apply Only to Bitcoin?
Hashing is the central and integral part of a different blockchain. Many cryptocurrencies are supported by mining, such as Litecoin or Bitcoin Cash. Other blockchains still use different mining algorithms. However, today, many hashing algorithms differ only in the way data is processed.
Closing Thoughts
Blockchain technology became the most influential innovations of the past century that determined the future development of technologies and hashing is a cryptographic function that empowered this technology. As such, it’s essential to understand how does hashing work and why it is being used in blockchain technology.
