What Hash Does Bitcoin Use?

A hash algorithm is what takes data of any arbitrary size and transforms it into a certain alphanumeric string. This certain bit size may vary based on the hash function being used.

And, this fixed size output is called a HASH. In other terms, a hash is simply the cryptographic byproduct of a hash algorithm. This is the reason that a hash can be treated as a ‘digital fingerprint’ of the data processed through the hashing function.

Logically, the same hash will be generated only from the same input data. In case you modify the data with a single space or a comma, then it will change the hash output completely.

Bitcoin’s Blockchain too uses the properties of this cryptographic hash function in its consensus mechanism.

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Bitcoin Hash: Want To Know?

Bitcoin Blockchain uses a Secure Hash Algorithm – SHA-256. This Secure Hash Algorithm was developed by the NSA (National Security Agency) by the USA in 2001.

The Proof of Work algorithm of Bitcoin is based on SHA-256, using which bitcoin miners solve computationally difficult mathematical problems to add blocks into the chain.

Blocks, in bitcoin blockchain, are added into the chain once the hashes have been verified on the basis of a lottery. That’s right, a LOTTERY!

How Do Miners Win the Lottery?

In order to mine a block successfully, a miner needs to hash the header of the block in such a way that it’s either less than or equal to the TARGET.

The ‘target’ is that the SHA-256 hash of the header of the block has to be a 256-bit alphanumeric string, and has to start with 18 zeroes. As the difficulty change every 2016 blocks, the target changes too.

And the miners arrive at the target by varying a small portion of the block’s headers, which is known as a ‘nonce.’ A nonce always begins with ‘0’ and is raised every time for obtaining the required hash or target.

Since the varying of the nonce is miss and hit, the chances of getting this target, that begins with these many zeroes, becomes very low. Thus, many attempts need to be made by a miner while varying the nonce.

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Bitcoin Hash Lottery Winning

This is what requires an enormous amount of computational power and hardware resources proving that a huge amount of work is carried out before mining any single block. This is the prime reason it’s called “Proof-of-Work.”

This way, whichever miner first obtains the right Bitcoin Hash is the one who will win a lottery and get the block reward of 12.5 BTC.

Bitcoin mining is an expensive and energy-intensive affair that needs you to make costly hardware investments, pay for well-amounted electricity bills, and demands you to have a good amount of computer knowledge.

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Kapil Gauhar

Kapil Gauhar is the founder of Blogger’s Gyan. He is a Passionate Blogger, a Big Thinker and a Creative Writer. His passion for doing friendship with words and letting people know about the wonders of the Digital World is what motivates him to take writing as a career.