What Is Hashing?
A hashing algorithm on a blockchain takes an infinite number of bits, puts them through calculations, then outputs a fixed number of bits. No matter the length of the input data, the output is always rectified at a fixed length.
Why Is Hashing Important?
Hashing helps to prevent major issues in the cryptocurrency industry, including:
- Double-Spending — Double-spending on a blockchain is the risk of when users can spend cryptocurrency twice or more.
- Fraudulent Transactions — These are transactions that are untrue or used deceitfully.
Hashing also allows passwords to be safely and securely stored on the blockchain. Since hashing creates a unique non-duplicable number from the algorithm, hashing can be used as a way to verify a file’s authenticity.
Hashing and Bitcoin
Hashing plays an important role in the Bitcoin system. The specific hash algorithm on Bitcoin is the Secure Hashing Algorithm 256 (SHA-256). This algorithm is a one-way cryptographic function, meaning the original data cannot be retrieved through decryption.