How are hash functions used in bitcoin?

Hash functions are data structures that are commonly used in computer systems for tasks such as checking the integrity of messages and authenticating information. Cryptographic hash functions add security features, making it difficult to detect the content of a message or information.


uses SHA-256 and RIPEMD160, while Ethereum uses the Keccak-256 hash function. They are mainly used to generate public keys and hash blocks.

As proof of work, a cryptographic hash function is used in a block (group) of transactions. Next, Bitcoin miners use computing devices to find part of that hash in what is called a partial reversion of the hash. The first miner to do so is chosen to validate the transactions and receives a reward for their efforts. No matter how short or long the entry is, whether it's a single word (hello) or even an entire novel (Bleak House by Charles Dickens), the hash is fixed at 64 characters.

SHA-256, the algorithm used by Bitcoin, generates 256-bit long hashes (a 256-digit string made up of ones and zeros). When creating a user account on any web service that requires a password, the password is executed using a hash function and the hashed summary of the message is stored. I remember going through SHA256 in my cybersecurity course on message encryption and cryptography, and now I've encountered these same SHA256 and hash functions in my blockchain development course. Now I'm starting to imagine an application of blockchain in computer systems, although it's a good article.

Hashing is an integral part of all blockchain-based transactions, including cryptocurrency trading. The cryptographic hash function serves as the basis for creating a blockchain and taking advantage of those solutions. This means that if a hacker can access the database containing the stored hashes, they will not be able to immediately compromise all user accounts because there is no easy way to find the password that produced a given hash. Anyone interested in bitcoin has ever heard the phrase “cryptographic hash function”.

If you use SHA-256 to generate a hash from “fun”, you'll always get the result shown in the following table. Hash functions weren't designed for cryptocurrencies, but they are widely used in major cryptocurrencies, mainly because of the properties I mentioned earlier. In the code example above, we have already seen that changing a small part of the input of a hash function results in a completely different output. This property allows us to encode any file, be it a text document, an image or even a video file, and get the result with the same length.

In bitcoin mining, the feature entries are all of the most recent transactions that haven't yet been confirmed (along with some additional entries related to the timestamp and a reference to the previous block). Once we have overcome the introduction of hash functions, let's now see how they are used in the main cryptocurrencies. In the Bitcoin protocol, hash functions are part of the block hashing algorithm used to write new transactions to the blockchain through the mining process.

Gertrude Majera
Gertrude Majera

Freelance web aficionado. Subtly charming zombie junkie. Typical coffee maven. Wannabe travel aficionado. Hardcore music lover. Passionate pop culture aficionado.

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