Basics of hash function: how it ensures the security of the blockchain

A hash function is one of the most fundamental mechanisms on which modern information security is built. It transforms input data of any size into output of fixed length using mathematical algorithms. This simplicity at first glance conceals a powerful tool that underpins cryptocurrencies, blockchains, and distribution systems.

How a hash function works in practice

Every hash function generates output of a fixed size, regardless of the size of the input data. For example, the SHA-256 algorithm always produces a 256-bit result, while SHA-1 generates a 160-bit digest.

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

SHA-256:

• Input: Binance → Output: f1624fcc63b615ac0e95daf9ab78434ec2e8ffe402144dc631b055f711225191
• Input: binance → Output: 59bba357145ca539dcd1ac957abc1ec5833319ddcae7f5e8b5da0c36624784b2

Note: even a small change in the case of the first letter resulted in a radically different outcome. However, regardless of the size of the input data, the result always has a fixed size of 256 bits (64 characters).

When using SHA-1, we will get different values:

SHA-1:

• Input: Binance → Output: 7f0dc9146570c608ac9d6e0d11f8d409a1ee6ed1
• Input: binance → Output: e58605c14a76ff98679322cca0eae7b3c4e08936

But the output length remains constant at 160 bits.

Main properties of cryptographic hash function

A cryptographic hash function differs from a regular one in that it has special characteristics that protect data from attacks. To be considered reliable, a cryptographic hash function must satisfy three critical properties:

Collision resistance: the impossibility of finding two different inputs that generate the same hash. Although theoretically, collisions will always exist ( due to the infinite number of inputs and a limited number of outputs ), the probability of their occurrence when using a reliable hash function is so low that it would take millions of years of computations to find one.

Resistance to first pre-image attack: the inability to “reverse” a hash function, i.e., to find an input from a known output. This property is critical for data protection – for example, servers can store password hashes instead of the passwords themselves, without risking the disclosure of the original.

Resistance to second pre-image finding: the inability to find an alternative input that generates the same hash for an already known output. Since any collision-resistant function is automatically resistant to this type of attack, this property depends on the first.

Families of SHA algorithms and their security

SHA stands for Secure Hash Algorithms ( secure hashing algorithms ). This is a set of cryptographic hash functions that includes several generations:

• SHA-0 and SHA-1: are no longer considered secure as collisions have been found in them.
• SHA-2: includes SHA-256, SHA-512, and other variants; currently considered secure
• SHA-3: the latest generation, developed as an alternative to SHA-2; also considered secure.

As of today, only SHA-2 and SHA-3 are considered reliable for cryptographic use. SHA-256, which is part of SHA-2, remains the primary algorithm used in Bitcoin.

The Role of Hash Function in the Bitcoin Mining Process

Bitcoin mining is heavily dependent on hash functions. Miners perform a set of hashing operations, including verifying balances, linking transaction inputs and outputs, and hashing all operations in a block to form a Merkle tree.

The most important task of a miner is to find a valid hash for a candidate block. For this output, it must start with a certain number of zeros, which determines the mining difficulty. The miner must experiment with different inputs, repeatedly hashing each time until a result that meets this criterion is found.

The difficulty level is not static. The Bitcoin protocol automatically adjusts the difficulty based on the network hash rate ( of the total computational power of all miners ), ensuring an average block time of around 10 minutes. If more miners join the network, the difficulty increases; if it decreases, the difficulty decreases accordingly.

It is important to understand: miners do not seek collisions. For each block, there is a set of possible correct solutions ( hashes that start with the required number of zeros ), and the miner only needs to find one of them. Since mining is an energy-intensive and costly process, miners have no incentive to cheat the system.

Practical significance of hash functions in cryptocurrencies and distributed systems

Cryptographic hash functions play an integral role in all aspects of blockchain technology. They are used for:

• Creating cryptographic links between blocks that form the very structure of the chain
• Grouping and merging transactions into blocks
• Generating addresses and private keys
• Ensuring the integrity and authenticity of data

The true power of hash functions is revealed when working with large volumes of information. Instead of storing and verifying complete datasets, one can generate their hash and use it for quick verification of integrity. This solves the problem of scalability and storage efficiency.

In the context of blockchain, this means that large volumes of transactions can be condensed into a single compact hash, which serves as a digital “fingerprint” of the entire block. Any attempt to alter data in previous blocks would require rehashing the entire chain, making such attacks practically impossible.

Conclusion

A hash function is not just a mathematical tool; it is the foundation of the security and reliability of the entire cryptocurrency ecosystem. Understanding the principles of how a cryptographic hash function works, its properties, and mechanisms provides a deeper understanding of how blockchain networks achieve such a level of security and decentralization. From Bitcoin to modern distributed systems, the hash function remains the unseen hero that ensures data remains immutable and reliable.