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Crypto Terms:  Letter C
Jun 19, 2023 |
updated Apr 02, 2024

What is Cryptographic Hash Function?

Cryptographic Hash Function Meaning:
Cryptographic Hash Function - an algorithm that produces fixed-size hash values from variable-size transaction inputs.
2 minutes

Let's find out Cryptographic Hash Function meaning, definition in crypto, what is Cryptographic Hash Function, and all other detailed facts.

A cryptographic hash function is an algorithm used to take an arbitrary transaction input of a variable size and transform it into a fixed-size value, known as a hash.

A simple example of how hash functions work is to add up the digits of a multi-digit number until a single-digit output is reached. If the input is 173, adding up 1, 7, and 3 is 11. The sum of adding 1 and 1 is 2, which is the final output. The output always has to be a single-digit, no matter how long the input number is digits-wise.

Hash functions have several typical characteristics:

  • Calculating the output for any given input has to be easy. However, it must be nearly impossible to reverse the process;
  • Determinism – if a specific input is given to the algorithm, the same output must always be produced;
  • Collision resistance – it should be very unlikely for two different inputs to produce an identical output;
  • Avalanche effect – changing a single bit of the input data should create a completely different output.

Hash functions can be utilized for various situations, like randomizing functions. They can also be applied as checksums for the integrity verification of computer files after their transmission of prolonged storage.

Hash functions serve a vital role in cryptocurrency mining via the Proof of Work (PoW) consensus algorithm. Bitcoin (BTC), one of the PoW-mined cryptocurrencies, relies on the SHA-256 hash function. Miners working on adding a new block to the chain need to produce a target – a hash value below a specific threshold. A successful outcome yields them rewards.

Hashes are pseudorandom, meaning that they are deterministic. It is impossible to predict the output of an input of any value before it has been run through the hash function. This mechanic means that miners cannot generate new Bitcoin blocks randomly and their proof of work must be verified.