Hashing is a fundamental pillar in blockchain technology. It’s the backbone for the secure operation of distributed ledgers, making it an indispensable element in electronic money. Moreover, it’s a versatile tool reinforcing blockchain’s security, integrity and efficiency.
Understanding hashing in blockchain is crucial to unlocking the core mechanics that ensure data reliability and immutability within these networks. The following visual guide explores the intricacies of blockchain hashing, its impact on a network’s security and its role in the broader context of processing transactions in digital assets.
Bitcoin hash rate explained
Bitcoin hash rate, or simply ‘hash rate’, is a metric quantifying a network’s computational power and efficiency. It represents the number of hash functions a transaction processor’s hardware can compute within a second. A higher hash rate signifies that a processor can perform more computations within a given time.
The unit expressing hash rate is hash per second (H/s). However, due to the immense scale of Bitcoin processing, it’s often measured using more significant units like gigahashes (GH/s) or terahashes (TH/s). The formula to calculate hash rate is straightforward:
H/s = Total hashes / Time
Total hashes represent the number of hashes a network computes, while Time denotes the period during which the calculation occurs. Suppose a processing rig processes 1 billion hashes over one second. Based on the formula, the rig’s hash rate is 1 billion H/s or 1 GH/s.
Hash rate is a crucial factor in maintaining a network’s security. As it increases, it becomes more challenging for malicious actors to infiltrate. A blockchain with a high hash rate has vast computational power distributed across its network of processors. So, attackers would need immense processing capability to overpower the existing network, making it infeasible for most.
What is hashing in blockchain?
Blockchain hashing involves taking an input like a transaction, block or any information and subjecting it to a hash function, which generates a hash or a fixed-length alphanumeric string unique to that specific input. Any subsequent changes to the original data will result in a different hash, making it easier to detect manipulation or fraud.
A hash function must possess these properties to become an effective cryptographic tool:
1. Fixed length hexadecimal string unique to that input
No one should be able to reverse the hash function to determine the input from the given output. Regardless of whether it’s on the blockchain or not. The input maps the way to the output, but no one can ever determine the input when given the output.
2. Collision-resistant
It’s improbable for two different inputs to produce a similar hash length, albeit of varying patterns. This characteristic—collision resistance—ensures the blockchain accurately verifies data authenticity without the risk of duplicates. Otherwise, collisions would create ambiguities and open opportunities for attackers to manipulate the network by substituting data with similar hashes.
Two inputs can generate the same output since there are only 1.15*10^77 unique outputs when hashing with SHA-256. Since we’re dealing with a finite number, there is an infinite number of potential inputs, which will inevitably lead to collisions for some strings.
At the same time, we can operate safely with the assumption that it’s highly unlikely to produce a collision. Shorter output hash functions such as SHA-128 (128 bits) have significantly fewer potential outputs and are thus declared insecure as a collision can generate a few thousand dollars in processing costs.
3. Deterministic
The output hash will always be similar, given the same input data and hashing algorithm. This attribute is essential to ensuring network consistency and reliability, where any participant can independently verify data integrity by recreating the hash using a similar algorithm and comparing it to the recorded hash. A match confirms there’s no tampering of data.
4. Computationally efficient
Effective hashing enables quick computation without sacrificing high-level security. In other words, the hash function must process data quickly while the blockchain handles numerous transactions. This way, transaction processors can rapidly validate transactions and create new blocks without causing undue network delays, making hashing more practical for real-world applications.
5. Randomised generated hashes for each input
Any change in input data should produce a totally different hash value with no discernable relationship to the output from the previous input. While this phenomenon has nothing to do with collisions, it’s valuable to demonstrate data integrity; the data object is still in the same state as when it was published on the chain.
6 applications of blockchain hashing
Blockchain hashing leverages its properties to enhance security, integrity and privacy within digital ledgers in the following applications.
1. Information and message authentication
A message or information subject to authentication undergoes a specific hashing algorithm. The resulting hash is unique to the input data transmitted to the network. When the recipient receives the data, they can independently hash it using the same algorithm to confirm its authenticity and rule out tampering.
2. Data changes monitoring
Blockchain hashing is instrumental in monitoring and detecting data changes, especially when multiple parties need to access and update shared information. Take the healthcare industry, for instance. A single source of immutable medical data means providers can access a patient’s comprehensive health records and authenticate them independently, preventing misdiagnoses and other conflicts.
3. Data privacy
When hashing personal identifiers and other sensitive information, you, other users and businesses maintain privacy while allowing validation and verification processes through hashes.
Let’s look at cybersecurity, for example. SmartLedger, a blockchain solutions company, developed the Certihash suite to secure data from attackers by hashing information on the network, making it impractical to defraud data.
4. Database management
Databases must ensure consistency, integrity and authenticity. By incorporating hashing functions, you can utilise digital fingerprints to maintain an immutable log of changes.
The process is even integrable on a massive scale. The government of Tuvalu, a South Pacific island, is working to create the Tuvalu National Digital Ledger and store identity, citizenship and financial data on a public blockchain. Of course, security is a primary concern, so hashing will play a crucial part in the revolutionary formation of the ‘world’s first blockchain citizens’.
5. Encryption and decryption of digital signatures
Creating digital signatures involves taking the hash of a transaction and encrypting it with a private key. If you’re the recipient, you may decrypt a signature using a corresponding public key to verify the sender’s identity and the transaction’s integrity.
Hashing is a crucial part of this process’s encryption and decryption aspects. It’s beneficial in pseudonymity, ensuring participant identities remain private in public transactions.
6. Data extraction and retrieval
Given the size and complexity of blockchain databases, efficiently locating and verifying specific pieces of information is crucial. In this case, hashes act as pointers to particular data entries.
When you search for a particular record on a blockchain, you won’t need to scan the entire ledger. Instead, you can search for the corresponding hash that acts as a unique identifier, significantly accelerating data retrieval and ensuring you access the information you want.
Elevate data management and processing with blockchain hashing
Hashing is the foundation of trust, efficiency and security in blockchain technology. It ensures data remains tamper-proof and instantly verifiable in an often trustless environment. As blockchain hashing continues to advance and permeate more industries, it’s essential to start understanding its potential and role in the future development of digital technology.
You can delve deeper into hashing for blockchain and other related topics via the Bitcoin SV blockchain, which provides a primary infrastructure that makes data-based economies more feasible.
Learn more about the subject by downloading our eBook, ‘What the BSV blockchain is and why it is the infrastructure for the data economy’. Visit BSV Blockchain’s extensive library of articles to know everything about blockchain.