Basics of hashing: how it works and why it is important for blockchain

The Mechanism of Hash Functions

Hashing is the process of converting data of arbitrary size into a fixed-length sequence of characters using special mathematical algorithms. Each hash function produces results of the same size, regardless of how large or small the input file is.

Let's consider a practical example. If we pass the words “Binance” and “binance” through the SHA-256 algorithm (, the same one used in Bitcoin), we will get:

• Binance → f1624fcc63b615ac0e95daf9ab78434ec2e8ffe402144dc631b055f711225191
• binance → 59bba357145ca539dcd1ac957abc1ec5833319ddcae7f5e8b5da0c36624784b2

Even a tiny change in the case of the first letter created an entirely different sequence. However, both results have exactly 256 bits (64 characters ). This is a key property of hashing — output size stability.

What Makes a Hash Function Cryptographic

Cryptographic hash functions are specialized versions of ordinary hashing algorithms that apply encryption principles. SHA (Secure Hash Algorithms) is a family of cryptographic functions that includes several groups: SHA-0, SHA-1, SHA-2, and SHA-3.

As of today, only SHA-2 and SHA-3 are considered secure. SHA-0 and SHA-1 have long been recognized as vulnerable due to the collisions found in them — situations where two different inputs produce the same output. SHA-256 is part of SHA-2 and remains a reliable standard in cryptocurrency networks.

Three Key Properties of a Reliable Hash Function

Collision resistance

Although mathematically collisions will always exist ( due to the infinite number of possible inputs and the limited number of outputs ), a secure function makes it practically impossible to find them. For SHA-256, finding even one collision would require millions of years of computations. Therefore, a hash function is considered secure not from collisions in general, but from the possibility of detecting them in a reasonable time.

Irreversibility (resilience to first view)

This property makes it impossible to “crack” the input data from the result. If you have a hash, you cannot determine which text created it, except by brute-forcing through all possible variants. In practical application, this means that web services can store password hashes instead of the passwords themselves — even if an attacker obtains the database of hashes, they will not be able to quickly decrypt them.

Resilience to the second snapshot

This property protects against attacks when an attacker tries to find an alternative input that will generate the same hash as the original. If the hash function is collision-resistant, it is automatically protected from this type of attack.

Practical Applications in Blockchain and Mining

For Bitcoin and other cryptocurrencies, hashing is not just an additional tool; it is a fundamental technology. The blockchain uses hashing at multiple levels: for verifying transactions, creating a Merkle tree, and linking blocks together into a continuous chain.

The most energy-intensive operation is mining. Miners take numerous random inputs, hash them through SHA-256, and look for a result that starts with a certain number of zeros. The difficulty of this task is automatically adjusted: if the number of miners increases and the network's hash rate rises, the difficulty increases so that the average time to form a block remains around 10 minutes.

An interesting point: for one block there are several valid solutions ( several hashes that meet the condition ), so miners do not compete for an exact result, but only for finding any valid option. This makes the system more resilient and fair.

Why hashing is critical for security

Determinism of hashing means that the same input always produces the same output. This allows for confidence in data integrity: if you know the correct hash of a file or transaction, any free modification of its parts will instantly change the hash. Thus, the blockchain preserves the non-randomness of each block, and any attempt to disguise a counterfeit is immediately visible.

In addition, hashing allows for working with vast amounts of information compactly. Instead of “remembering” the entire large file, the system only remembers its hash. This significantly saves resources and speeds up verification.

Conclusion

Hashing with cryptographic properties is one of the main pillars of modern blockchain. Understanding how these functions work, their resilience to different types of attacks, and their role in the mining process helps to deepen the understanding of the security and reliability of cryptocurrency networks. SHA-256 and other algorithms from the SHA-2 group remain the gold standard because they have not yet demonstrated practical vulnerabilities, which means that blockchains relying on them remain protected from modern attacks.