Hashing is a mathematical function that transforms any amount of input data into a fixed-length character string that is called a Hash. Since the hash is customized for the input data, any alteration to this data will automatically result in a different Hash.

Hashing is an irreversible, one-way function and as a result, cannot be used to extract the exact data that was uploaded into the system. In the field of computer science, hashing algorithms are used extensively for digital signature verification, password storage, and data authentication. The application of hashing techniques in blockchain technology is done to protect the integrity of data and to guarantee that transactions cannot be altered.

The Process of Hashing – how does hashing work?

The hashing process begins with the input(that is, the data that needs to be hashed). This data can be present in various forms, such as a file, a block of transactions in an electronic ledger or a chain of texts which is then passed through the algorithm.

The output hash is a string of alphanumeric characters which is recorded on the electronic ledger(blockchain) as a special reference to the input data. Whatever the size of the data set, hashing generates a fixed-length hexadecimal output from the input data.

The hash can be recalculated when the data is needed later, and if it agrees with the hash that has been saved, it is verified that the data has not been altered. Consequently, hashing acts as a kind of digital signature, proving the integrity of the source data.

Common hashing algorithms in Blockchain

Different Hashing algorithms exist, each having its own perks and disadvantages.Some typical examples of hashing algorithms used in Blockchain technology and the cryptocurrencies associated with them include:

SHA-256 (Secure Hash Algorithm 256-bit):The most widely used hashing algorithm in blockchain technology. It is widely recognised for its speedy and secure operation. It produces a fixed-length 256-bit encryption that creates a digital signature for each transaction.Bitcoin(BTC) is powered by this algorithm.
Scrypt:Litecoin(LTC) and Dogecoin employ a key derivation mechanism called Scrypt, to safeguard its network and transactions.It is designed to be more memory-intensive than SHA-256, rendering it less susceptible to integrated circuit-based attacks.
Ethash:Specifically created for Ethereum (ETH), Ethash is a hashing algorithm used for network security and mining. The hashing algorithm Ethash, is made to withstand ASIC (Application-Specific Integrated Circuit) attacks. Mining using specialized gear becomes more challenging due to its increased memory and processing power requirements.
CryptoNight: Monero (XMR) as a cryptocurrency, employs the special features of the CryptoNight algorithm to improve security and privacy.
DASH uses the X11 cryptographic functions to improve security while boosting energy efficiency in mining.
Blake2b: This hashing method is fast and effective, generating fixed-length hashes up to 256 bits in length. Some cryptocurrencies that prioritize privacy, including Grin, Siacoin (SC) and Beam, rely on it.
SHA-3 (Secure Hash Algorithm 3): Is a hashing algorithm that replaced the SHA-2 method and was created to offer improved security against cyber breaches. It generates a fixed-length hash of up to 512 bits.

These are but a handful of the several hashing algorithms that exist. The choice of hashing algorithm depends on the particular needs of the blockchain application, including security, speed, resistance to ASIC mining and integrated circuit assaults, and so on.

How Blockchain uses Hashing

Blockchain technology relies heavily on hashing to make transactions secure and less susceptible to counterfeiting.

Applications of hashing in blockchain can be seen in the following ways:

Transaction Hashing: Every transaction on a blockchain is identified by a distinct hash that is used to represent it. Thanks to the inclusion of this cryptogenic hash function,the blockchain is safeguarded.

Block Hashing: Every single block in a blockchain is identified by a distinct hash that is part of the block hashing process.So as to create a chain of blocks protected by the cryptogenic hash function, this hash includes the transaction hash of the previous block.

Mining: The process of adding new blocks to the blockchain is called mining. Throughout the mining process, miners add new blocks to the existent ones, utilizing complex computational power to make the block tamper-proof.

Advantages of Hashing in Blockchain

Hashing with blockchain technology has a lot of advantages.Blockchain technology is a dependable and trustworthy option for online transactions because of these advantages. The following are the top 5 advantages of blockchain hashing:

1.Enhanced blockchain security: Since hashing is a one-way function, it is practically hard to deduce the input data from the hash via reverse engineering. Because of this, it is more difficult for hackers to change or modify data on the blockchain.

2.Protection on the blockchain against data manipulation: Hashing offers protection on the blockchain against data manipulation. A different hash would be produced by any attempts to alter the data in a block or transaction, breaking the chain and identifying the tampered data.

3.Facilitating data verification: Hashing provides an accurate technique for verifying the authenticity and quality of data on the blockchain. To make sure the data hasn’t been tampered with, nodes on the blockchain network are able to independently confirm the hash of every block in the chain. This negates the need for a central authority and makes it possible for blockchain integrity verification.

4 .Permanent data storage and verification: The blockchain’s hashing mechanism guarantees that the data stored there is unchangeable. The integrity of the data is guaranteed since once it is uploaded to the blockchain, it cannot be removed or changed.

5.Enhanced efficacy: Hashing makes it possible for data to be stored and retrieved on the blockchain in an efficient manner. Every block and transaction is represented by a distinct hash, hence it is simple to locate specific data on the blockchain.

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Disadvantages of Hashing in Blockchain

Although hashing is an essential part of blockchain technology, there are some cons to it. Highlighted below are a few drawbacks of hashing:

Collision Attacks: Although unlikely, a pair of distinct input values may result in the same hash value; this is known as a collision. A criminal group or individual could exploit this to fabricate transactions or alter data on the blockchain.

Centralization: The adoption of the highly computational Proof of Work consensus method has resulted in the centralization of bitcoin mining power among a small number of sizable mining pools. If one pool or group of pools controls more than 50% of the network’s hashing power, this concentration could jeopardize the security of the blockchain.

51% Attack: A 51% attack is a type of cyber assault where a certain group or person controls more than 50% of the network’s hashing power that’s meant for general circulation, allowing them to modify transactions and double-spend coins.

In Conclusion

Considering the simple fact that hashing in blockchain may be vulnerable to threats like centralization and collision attacks, continuous attempts to enhance hashing algorithms and blockchain security are intended to reduce these risks.