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What is a Blockchain Hash Function

September 12, 2022 - 7 min read

Blockchain hash functions are one of blockchain technology’s most often utilized cryptographic algorithms (but not encryption) algorithms designed to safeguard data integrity.

The hash function in the blockchain is used to connect blocks in a chain and to secure message blocks. Each block in the blockchain contains its hash and the hash of the block that preceded it.

Incorporating a cryptographic hash function is advantageous to prevent fraudulent transactions, double spending in blockchain, and password storage. A hash function transforms a random input of data into a fixed-length and structured string of bytes. A transaction’s hash makes it simple to identify transactions on the blockchain.

Introduction to Hash Function

Hash functions are mathematical functions that transform a given set of data into a bit string of fixed size, also known as the “hash value.” The fixed bit length can vary, such as 32-bit or 64-bit or 128-bit, or 256-bit depending on the hash function used. The term “hash function” is originally derived from the French word “hacher”; the word “hacher” means to “chop into small pieces.” This indicates how a hash function is designed to ensure that the output of a hash function is always of a defined length. Moreover, this hash is the cryptographic byproduct produced by a hash algorithm.

Many cryptographic hash functions and algorithms are available, such as MD5, SHA-1, SHA-256, BLAKE2, etc. One of the most well-known cryptographic hash functions, Secure Hashing Algorithm 256, or SHA-256 as it is more generally known, is extensively utilized in blockchain technology. The National Security Agency (NSA) was an organization developed in the year 2001.

Purpose of hash functions

On the one hand, the requirement to make content uniform in length led to the development of hash functions. On the other hand, the functions were developed to be used as uniquely distinctive identifiers. Outside of the realm of cryptocurrencies, typical applications for hash functions include the following:

  1. Determining a checksum, or short checksum, for an item, such as the checksum for an ISBN
  1. In cryptographic applications, identifying content is almost entirely free of ambiguity while doing it “briefly” and without disclosing any information about it.

Properties of Hash Functions

The message is protected from being read by unauthorized parties thanks to a procedure called hashing, which significantly simplifies the computation. It does this by compressing the message into a hash or a digest, both of which are efficient for communication and calculation.

1. Deterministic

The hash functions used in cryptography are deterministic. It consistently produces the same hash for identical input data. Basically, a hash function is deterministic if it always has the same hash for similar inputs. No matter how often we feed the information “Blockchain is the future” through the hash function, it should always produce the same result or hash.

2. Collision Resistant

Another significant property of a cryptographic hash function is collision resistance. Being collision-resistance implies that it should be doubtful for two distinct inputs to create the same output or hash.

For example, suppose a hash algorithm outputs N output bits. Then, an adversary must do 2(N/2) hash operations on random input to seek the second output match.

Therefore, for every 256 hash functions, an adversary must do 2128 hash operations. Even if each calculation requires 1 microsecond, it will take nearly 1025 years to match the outcome.

3. One-way functions

Hash functions are commonly known as one-way functions since they cannot be reversed. Hash functions are cryptographic functions; however, they are not encryption. We need to know that encryption works by encrypting the appropriate data with an encryption algorithm and an encryption key. This produces ciphertext that can only be viewed in its original form with the correct decryption key. In contrast to encryption, a hash function is a one-way function; in other words, if you have a hash, you cannot decrypt it to recover the original input. Even if a hacker can access a hash output in a real-world scenario, he cannot decrypt it to obtain the original input.

For example:

M: Hello → SHA-256(M) → 185F8DB32271FE25F561A6FC938B2E2643……..

How Does the Hash Function Work?

The hash function can take inputs of different lengths but always produce outputs of the same length. This is because the transactions themselves are used as inputs for cryptographic hash functions, and the resulting output from the hash method is of a predetermined size. For example, the operation of a hash is depicted in the following figure.

There are a significant number of different hash functions available today; hence, if we were to calculate the SHA-256 hash value of the phrase Hello world it might look something like this:

64ec88ca00b268e5ba1a35678a1b5316d212f4f366b2477232534a8aeca37f3c

We get this value if we focus only on the hash. Since the hash function is susceptible to the case, changing even a single letter will result in a different value for the hash. If we calculate the hash for “hello world” then the resulting SHA-256 hash value will be:

b94d27b9934d3e08a52e52d7da7dabfac484efe37a5380ee9088f7ace2efcde9

You can check the SHA-256 hash value online here.

Uses of Hash Functions in Blockchain

Hash functions are frequently employed to safeguard the integrity of data. Given a trusted hash of the data, it is possible to calculate the hash of the data and compare the two values. If they match, the data has not been altered since the initial hash was generated.

The blockchain’s digital ledger is meant to contain important information that can benefit an attacker if altered in his favor. In addition, this ledger is stored and communicated by a network of nodes with mutual mistrust.

Consequently, the blockchain offers multiple applications for hash functions and integrity protection. Among the most prevalent applications of the hash function in blockchain are:

  • Digital signatures: Hash functions are an essential component of digital signature algorithms, condensing data into a compact value while maintaining its integrity. Blockchain transactions and blocks utilize digital signatures for preserving data integrity and providing authentication.
  • Merkle Trees: Merkle trees summarize a list of transactions within a block into a single value in the block header. They use hash functions to ensure that finding two Merkle trees with the same root hash is impossible. By storing the root hash within a block header and confirming the block header’s integrity, the integrity of the transactions included within the block’s body is also protected. This ensures that it is impossible to find two Merkle trees with the same root hash by utilizing hash functions. This protects the integrity of the block header by keeping the root hash within the block header, safeguarding the transactions’ integrity.
  • Proof of Work consensus: The Proof of Work consensus algorithm defines a legitimate block as one whose header hash value is below a specified threshold. Hash function collision resistance is crucial here because it is challenging to locate a valid block.
  • The “chains” of the blockchain: Each block header in a blockchain block carries the hash of the preceding block header. This ensures that it is impossible to alter even a block without recognition. The difficulty increases as modifying one block necessitates creating new versions of every subsequent block.

What are Hashes Used for in Blockchains?

Several aspects of a blockchain system utilize hashes. First, each block contains the hash of the block header of the previous block, ensuring that no blocks have been altered while new ones are added. Moreover, cryptocurrency mining via proof-of-work (PoW) employs the hashing of randomly generated integers to arrive at a specific hashed value with a series of leading zeros. This resource-intensive function makes it difficult for a malicious actor to gain control of the network.

Final Words

Hash functions are crucial for safeguarding the immutability of the distributed ledger. If a blockchain’s hash function is compromised, an attacker could discover collisions for critical hash values (such as the block’s chains or Merkle tree values). This would make it easier for malicious nodes to alter the blockchain network’s history, causing a blockchain system to fail. Consequently, hash function security is fundamental to blockchain security. The entire system’s security is compromised if a blockchain’s hash function becomes subject to assault.

To level up and gain a deeper knowledge of all things related to the future of the cryptocurrency industry, check out the latest content in the Supra Academy section.

References

  1. Bansal, D. (2022, 24 Jun.). Hash function in blockchain. Topcoder
  2. Bitpanda. (2021). What is a hash function in a blockchain transaction?. Bitpanda
  3. Bybit Learn. (2020, December 17). Explained: What is hashing in blockchain? 
  4. Himanshi. (2022). Cryptographic Hash Functions in Blockchain. Naukri Learning. 
  5. Howard Poston. (2020, September 29). Hash functions in blockchain. Security Boulevard. 
  6. Maler, M. (2021, July 16). Learn the blockchain basics – Part 3 : Hashing functions. HackerNoon.
  7. Poston, H. (2021, December 2). Hash functions in blockchain. Infosec Resources
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