What is Blockchain Hashing & Its Relation to Cryptocurrency

What is Blockchain Hashing & Its Relation to Cryptocurrency

What is blockchain hashing & its relation to cryptocurrency? The development of blockchain technology is without doubt the most revolutionary innovation of our times. Blockchain has defined and changed how we transact, verify, and store digital assets through the use of Distributed Ledger Technology (DTL).

There are myriads of fields where blockchain technology can apply, for instance. Cryptocurrency is just one of the many fields it has been successfully applied. However, in order to comprehend how blockchain functions, we need to understand the concept of hashing.

What is blockchain hashing?

Hashing is the act of converting an input or inputs in the form of letters and numbers from a string of text using a mathematical function to produce an encrypted output of a fixed length. As a result, It is one way of ensuring secure communication between parties. As it protects transmitted messages to only reach the intended recipient.

Moreover, hash materializes through a formula that ensures that no unauthorized person tampers with the transmission of the message. In simpler terms, a given blockchain will function based on verified codes called a hash and digital signature. The DS ensures the blockchain confirms transactions.

Hashing in Cryptocurrency

Blockchain is the foundation from which cryptocurrency functions. Blockchain is a public ledger built by linking together individual blocks of transaction data. This gives blockchain a special role of only carrying validated transactions to prevent fraud and double spending of the crypto in question.

The process creates an encrypted value (hash). The result is a sequence of numbers & letters that do not resemble the original compiled data. The hash is the reason why your coins are safe in your blockchain-backed crypto.

The hashing process

In the world of cryptocurrency, hashing takes place when data from a block goes through processing by a mathematical function. The result is fixed-length output, which guarantees security. Any attempt to change any of the variables from the hashes in a given block would lead to a domino effect. Consequently, altering all of the previous transactions in the block alerts users.

Moreover, any person with ill motive will not be able to tell how long or short the input is, because all they can see is the output. For instance, hashing the word “Hi” will produce an output with the same length as hashed words of “I am going for a morning run.” This means that the functions for generating the hash are deterministic. It simply means producing the same number of output irrespective of the number of input inserted.

How Blockchain hashing works

To demonstrate how hashing works in cryptocurrency, let’s have a hypothetical input and output data in the table below:




0x d14a028c2a3a2bc9476102bb288234c415a2b01f828ea62ac5b3e42f

I am going for a morning run

0x e3b0c44298fc1c149afbf4c8996fb92427ae41e4649b934ca495991b

From the illustration, no matter how big or small your input is, the output remains fixed at the length of the designated bit (e.g. 256-bits). The output becomes very critical when dealing with a large amount of data and transactions. Because all you need is to keep and remember the hash to keep track of or conduct any transaction.

While generating an input is an efficient exercise, determining an out is extremely difficult. To process a hash function, some substantial and costly computer processing power needed. Those with the financial muscle to invest in the necessary technology can mine the coins, and they’re rewarded with new crypto tokens and transaction fees. Note that the first miner to create a hash under the outlined conditions is the only one rewarded.


Hashing is a fundamental process in the blockchain technology application. Hashing is truly the basis from which blockchain works. As such, anyone interested in blockchain and its usefulness to the crypto world must know that hashing is what makes blockchain technology uniquely useful.

Bitcoin: A Guide for Beginners (Free e-book)
Learn the basics before diving into the world of bitcoin
I agree to have my email address transferred to MailChimp for CryptoZink updates ( more information )
We respect your privacy. We'll NEVER spam, share or sell your info!

You May Also Like