Hashing is a process of encrypting data by running it through a special mathematical function. The hash function takes as an input any type of file, including a block of text, and returns a fixed-length result that generates a value or values from a string of text. When a message is meant for a single receiver, hashing is one approach to ensure security during the transmission process. The hash is generated using a formula, which serves to safeguard the transmission’s security against tampering.


In the case of cryptocurrencies such as bitcoin, the transactions are accepted as input and passed through a hashing algorithm (SHA-256 is used by bitcoin), which produces a fixed-length output. A cryptographic hash function is a subset of hash functions with qualities that make it suitable for cryptography. A cryptographic hash function must possess specific characteristics in order to be called secure.


Hash functions are part of the block hashing algorithm of the bitcoin protocol, which is used to write new transactions into the blockchain via the mining process. Hashing forms a crucial part of Bitcoin’s proof-of-work algorithm, and requires massive amounts of processing power.


Cryptographic hashing has long been used in cyber protection, and it is expected to be at the forefront of the next wave of blockchain applications.

Hot wallet – An online wallet. Hot wallets are considered less secure than cold wallets since the user’s private keys are exposed on the internet.

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