Hash is a mathematical algorithm that converts information into code. With it, miners turn large amounts of data into compact records that are easy to protect, store and transmit. In essence, a hash is every new chain in a block.
The transaction hash in the bitcoin blockchain consists of 64 characters weighing 256 bits. The BTC network uses the SHA-256 algorithm, which has the following characteristics:
🔸 Determinacy – allows you to track the original data, regardless of the number of conversions (the same message always leads to the same hash).
🔸 High speed – quickly returns the original information after verification.
🔸 Resistance to unauthorized changes – a small change to a message should change the hash value so extensively that a new hash value appears uncorrelated with the old hash value (avalanche effect). This ensures the security of the cryptocurrency.
Application of hash functions in the blockchain Miners record information about all transactions in the network. They apply a cryptographic algorithm to block headers to make them less than or equal to a given hash. The miner, who was the first to find the necessary value, receives a reward in digital currency (for bitcoin it is 6.25 coins).
Cryptography makes decentralized systems more secure than banks with physical proof of payment. In information-security contexts, hash values are sometimes called digital fingerprints.Â