Hash Functions: The Significance of Hashing in Blockchain Mining

    One of the backbones of blockchain technology is the cryptographic technique of securing data which is the hash function. Getting into the depth of the blockchain, the new decentralized and distributed digital ledger can get confusing when one is faced with the hashing algorithm. The hashing function is the fundamental process on which crypto mining is built, and thus, understanding it is crucial when jumping into the world of Web3’s decentralization. Let’s see what blockchain hash is all about!

    What Is a Hash?

    Hash is a mathematical function that transforms an arbitrary length of data (input) to a fixed encrypted value (output). That means no matter what size the input, its hash will always be a fixed size. 

    To simplify, consider the hash like a password that encrypts certain data. However, the added layer of security using hashing functions is that you cannot reverse-engineer them. Hash is a one-way function, which means that you cannot figure out the input from the hashed output.

    The same data (input) will always generate the same hash (output), this is called a deterministic function. Let’s see what that will look like:

    Input: Blockchain
    Hash: 625da44e4eaf58d61cf048d168aa6f5e492dea166d8bb54ec06c30de07db57e1 

    Hashing Function

    How Does a Hash Function Work?

    Let’s see the following examples of a SHA-256 (Secure Hashing Algorithm 256) hash functions:

    Input: Chainwitcher
    Hash: c5165a52fc12c022ff975d35ba02bef5df68c2d56eab1bd4d72c88f0e6826cf5

    Input: Chainwitchers
    Hash: 9964220410ca972f199f72c38b64ab9238981964c8efe673e9ce19a835a066da

    Input: chainwitcher
    Hash: 10865032b047340819505f242143c3fbc4c7064bfdcc8c2ddbfa65819cb4128f

    See how each version of the word “chainwitcher” has its own hash of fixed length. It is important to note that each input will always generate the same hash. That means, in the first example, no matter how many times you type in the exact letters and capitalization of “Chainwitcher”, the hash will always be the same.

    However, changing even or capitalizing a single letter will result in a completely different hash. In the third example, we can see that removing the capitalization of the letter “c” has resulted in a different hash. 

    Using SHA256 hash in blockchain transactions produces a string of 32 bytes. This string is usually a 64-digit hexadecimal number. What does that mean? Well, let’s break it down. 

    • 64-digit: The hash is a number made of 64 digits. 
    • Decimal: The decimal system, in the computing world, is a probability factor based on 10. That means that there are 10 possibilities for a certain number of 0 to 10. 
    • Hexadecimal: Hex is Greek for six. Deca is Greek for 10. This means that Hexa refers to 16 possibilities in a hexadecimal system. The numbers from 0 to 10 represent the decimal system. So, the first six letters of the alphabet are added to represent the other 6 factors (A, B, C, D, E, and F). 

    Hashing Transactions

    The Role of Hash Functions in Blockchain Mining

    So, how are hashing functions used in cryptocurrencies? Well, one of the major pillars of blockchain technology is its security, and thus, every transaction conducted on the blockchain uses hashing algorithms to prevent fraudulent transactions or double-spending. 

    Hashing is typically used in blockchain mining. Mining is the process of validating and adding transactions to the blockchain. So, the process goes:

    • Miners group up valid transactions into a block
    • Miners then hash out these transactions by using the MerkleTree data structure to generate a MerkleRoot (the hash of all transactions combined).  

    Merkle Root

    • In order to create a chain of blocks, each block has to have its own hash and the hash of the previous block. This way, the blockchain creates traceability and ensures that the chain of data is not corrupted.

    Blocks Hash

    • Each candidate block now has the hash of the previous block, MerkleRoot (hash of all transactions), timestamp, difficulty level, and a nonce value. 
    • In order to prevent double-spending, since the blockchain is operated on a distributed peer-to-peer blockchain, the network has to follow a certain consensus. Bitcoin follows the proof-of-work consensus in which each miner has to work in order to have a chance of adding a block to the blockchain. 

    Proof of workk

    • The work signifies here generating a hash that is equal to or less than a certain target hash determined by the network. 
    • This is where the nonce comes into play. Miners have to keep altering the nonce number and generating its hash until a number is less than or equal to the target hash. 

    Hashing Nonce

    • When a miner reaches that target after a significant amount of trial and error, he receives a reward and adds the block to the blockchain.

    Blockchain Hash

    Hashing functions are a crucial part of any crypto transaction or data stored on the blockchain. It is used to ensure the data within blockchain blocks are secured and not altered. The great thing about hashing functions is that it is very hard to reverse-engineer them unless using quantum computers, which are a long way from becoming a thing. In addition,  hashing functions are the backbone of crypto mining. Here’s a detailed explanation of how blockchain mining works!


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