Blockchain 101 Episode 59 – What is Hash Algorithm?

Hash Algorithm is a cryptographic algorithm that deals with encryption but not decryption. It is able to map data of arbitrary size to a bit string of a fixed size. The string has two unique characteristics :

Firstly, a small change to the input would change the hash value entirely.

Secondly, only an exact input would result in the same output.

There is no pattern between the generated input and the output values, hence it is impossible to reverse engineer the input value based on the output value.

The hash value can only be determined through trial-and-error. Trying all possible input values to determine the hash value that fulfils all prerequisites. Hash Algorithm ensures that it is not possible to derive the solution by working backwards in Bitcoin mining.

As such, miners work continuously to compute the hash value, which is basically a brute-force attack to guess the correct value. The first miner to find it will receive Bitcoin rewards.