What is Hashing in Blockchain?

Undoubtedly, blockchain technology is one of the most influential technological advancements of our era, as it has revolutionized the way digital transactions are verified and recorded by employing Distributed Ledger Technologies (DLT). 

However, comprehending the functioning of blockchain in the context of cryptocurrency necessitates grasping a fundamental concept: hashing.

What is Hashing in Blockchain?

Hashing is the process of taking an input (also known as a message) and converting it into a fixed-size output, also known as a hash value or digest. The hash function performs this conversion, which is designed to be a one-way process, meaning it is practically impossible to reverse the process and obtain the original message from the hash value.

In the context of blockchain, hashing is an integral part of the process that ensures the integrity of the data stored on the blockchain. When a transaction is added to a blockchain, it is first verified by a network of computers known as nodes. Once the nodes have verified the transaction's validity, it is added to a block, and the block is then added to the blockchain. Before the block is added, however, it must undergo a process of hashing.

Each block contains a unique digital fingerprint or hash that is generated by applying the hash function to the block's contents. This hash value serves as a unique identifier for the block, and any change made to the block's contents will result in a different hash value. This property makes it impossible to tamper with the block's data without changing the hash value.

Furthermore, the hash values of each block are used to create a chain of blocks, hence the name "blockchain." Each block contains the hash value of the previous block in the chain, forming a linked list. This creates a tamper-evident and tamper-resistant system, as any modification made to a block will result in a mismatch in the subsequent blocks' hash values.

Hashing plays a crucial role in securing the blockchain's data and ensuring its immutability. The cryptographic properties of the hash function make it virtually impossible to tamper with the data stored on the blockchain without being detected. This property has made blockchain technology one of the most secure and trustworthy technologies for storing and transmitting data.

Common Hash Functions

Some common hash functions include:

• MD5: Message Digest 5 (MD5) is a widely used hash function. While it was once regarded as secure, hackers have since discovered how to decode the algorithm and can do so within seconds.
• SHA: Secure Hash Algorithm (SHA) is another popular type of hash function. SHA has several variations organized into four families: SHA-0, SHA-1, SHA-2, and SHA-3. Generally, the higher the number, the more recent the release, and the more secure the algorithm.

For the present purpose, the most relevant hash function is the Secure Hash Algorithm (SHA), specifically the SHA-2 family, which includes a special member called SHA-256. SHA-256 is a hash function that converts a string of text into a fixed-length string, always 64 alphanumeric characters long, or 256 bits, which is where the "256" in its name originates.

Hashing vs Encryption

Encryption is a technique that transforms data into an unreadable format to safeguard it from unauthorized viewers. Only the access key can decrypt the encrypted data back to its original form, rendering the information useless to those without the key.

Encryption offers various advantages, such as enhancing data security at a low cost and facilitating secure file sharing.

However, encryption's key represents a security vulnerability as it can be transferred along with the encrypted data. This flaw allows unauthorized viewers to tamper with the original file by focusing on acquiring the key. Brute force attacks are the most prevalent form of cryptography attack, which involves trying random keys until the correct one is found. Furthermore, if the data owner loses or forgets the key, they will not be able to access the data.

In contrast, hashing generates a unique hash value for the original data, converting any size of data into a fixed value. This hash value is immutable, making it impossible to hack. If any user modifies the original data, the hash value changes entirely. Therefore, one of the primary uses of the cryptographic hash function is tamper-proof verification.

The Bottom Line

In conclusion, hashing is a critical process that ensures the integrity and security of data stored on the blockchain. By converting an input or message into a fixed-size output or hash value, hashing creates a unique digital fingerprint that serves as a tamper-evident identifier for each block on the blockchain.

This property, along with the cryptographic properties of hash functions, makes it virtually impossible to modify data stored on the blockchain without detection. Compared to encryption, which poses security vulnerabilities in its key, hashing offers a more secure and tamper-proof method of data verification.

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