The technology behind blockchain transactions is without a shadow of a doubt one of the most significant technological developments of our time.
Through the utilization of Distributed Ledger Technologies, it has outlined the procedures for the verification and storage of digital transactions (DLT).
Hashing is a fundamental idea that needs to be kept in mind if we are going to comprehend how blockchain technology works in the context of cryptocurrencies.
If you are new to blockchain and want to understand how cryptocurrencies like Bitcoin function, for example, then having a firm knowledge of this concept and the terminology that is associated with it would be helpful.
Even if it is rather technical, the goal of this post is to make it easier to understand.
How Hashing Works in Blockchain
When it comes to blockchain, what exactly is a hashing algorithm, and how does it function?
Simply explained, a hashing algorithm inputs an infinite amount of bits, performs some calculations on them, and then outputs a fixed number of bits.
However long the input data is, the output will always be in its correct form. In this context, “input” refers to the original data, whereas “hash” refers to the resultant alteration. There are a variety of hashing algorithms available today, and most of them simply differentiate in how they process data.
Knowing the underlying data structure is a prerequisite to completely grasping the concept of hashing. Pointers and linked lists are the foundations of a data structure, which is a specific method of data storage.
The purpose of pointers, which are themselves variables that refer to other variables, is to serve as markers that help the reader find their way to the correct spot. Furthermore, it contains the location of the following block in the chain. In contrast, linked lists are constructed from a series of nodes that are linked together by pointers.
The blockchain’s hashing mechanism assigns a unique hash value to each block, making it impossible to undo any previous changes. The header of the block contains the information that is used to uniquely identify the block. Specifics included are:
- 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
How to Solve a Hash?
Complex mathematical problems stored in the hash block’s header must be solved first. However, before beginning, a miner must engage in trial and error to choose which string to use as a nonce.
When a nonce (a string of numbers) is found, miners zero in on it because of its connection to the hashed data from the prior block. The new hash must be smaller than or equal to the target hash for the hashing operation to be successful. The miner will be rewarded in cryptocurrency if they successfully submit their block to the distributed ledger.
Cryptographic hash functions
Any given piece of data or transaction input can be rehashed by a hash function into an output of a predetermined size.
Hashing refers to the procedure of employing a certain hash function to handle a transaction. In this context, a hash refers to the result of using that particular hash algorithm in a transaction. And I think that covers everything. More explanation is needed to remove the mystery from hashing in blockchain.
Keeping in mind that the output size is the defining feature of any given hash function is crucial at this juncture. As a result, we have a wide variety of hash functions (we will get to that in a moment).
Cryptographic hash functions: their defining features
Certain traits or attributes must be displayed by a cryptographic hash function before it can be regarded safe. These characteristics are what make the hash function well-suited for use in blockchain-based cryptocurrencies like Bitcoin and Ethereum. All right, let me break it down for you in plain English.
Hash functions require a predetermined result. Therefore, the output of a hash function is guaranteed to be the same length regardless of how many times the input is processed. All hashes will be the same length but will be generated randomly and have unique patterns. Why does this matter? Suppose you keep a ledger and the outcomes are always different. What this means is that you can never remember which bits of input data went into the hash again.
A good hash function in blockchain technology is one that computes quickly for all input data.
While it could be challenging to locate the necessary input data for a hash, creating the hash itself should ideally be a quick and easy process.
You can get the hash result of a short message like “hello” in a fraction of a second. The hash of a huge file can also be obtained in a matter of seconds.
Strong cryptographic hash algorithms are one-way, which is a crucial feature. Let’s put it this way: if you have a hash of a certain transaction, you shouldn’t be able to use it to reconstruct the original data.
A blockchain’s security is bolstered by this feature. To determine the original data from a hash, you must first hash every possible combination of inputs until you hash the correct or related input. Nonetheless, it is extremely difficult to hash the input data because of how unpredictable it is.
Different hashes for every input (Randomized)
Hash functions generate unique results for each input, even if the differences between the inputs are as small as a single digit or character. Example: “Alpha” and “Alpha1” should have distinct hashes. Deciphering the patterns would be straightforward if they were similar overall and had minor variations at the conclusion.
For security purposes, cryptographic hash functions should also be collision-proof. Hash function collisions occur when two or more inputs generate the same or nearly identical hash value. As an illustration, a collision occurs when two inputs to a hash function generate the same output, even if “pic1” is a photo and “pic2” is a video. In the normal course of events, this would never occur. However, a “Birthday Box” may be to blame.
There can be little doubt that blockchain technology is among the most consequential technological breakthroughs of the last century. The method relies on hashing, a cryptographic algorithm.
To successfully mine for cryptocurrency in a blockchain and profit from it, you must first grasp the concept of hashing and the fundamentals of the underlying technology.