Hash Function A small program that scrambles data.

A hash function is a mini computer program that takes data, scrambles it, and gives you a unique fixed-length result.

The cool thing about hash functions is that:

You can put as much data as you want in to the hash function, but it will always return the same-length result.
The result is unique, so you can use it as a way to identify that data.

So in other words, a hash function allows you to create a digital fingerprint for whatever data you put in to it.

Try one out: SHA256

Hash Function Properties.

A good hash function has 3 important properties that make it useful.

Note: The SHA256 hash function is the main one used in Bitcoin, so I’ll use that in my upcoming examples.

1. You cannot work out the original data from the result.

A cryptographic hash function produces a random result (with no patterns), so there is no way of “going backwards” through the hash function to figure out what the original data was.

This is the property of a cryptographic hash function. You may be able to reconstruct the original data from the result of a “basic” hash function, but a cryptographic hash function’s job is to make this as difficult as possible.

2. The same data always returns the same result.

A hash function scrambles data systematically, so that the same input will always produce the same result.

If you put some data in to a hash function, you can be sure that data going to produce the same result every time.

For example:

data                sha256(data)
---------------     ----------------------------------------------------------------
learnmeabitcoin     ef235aacf90d9f4aadd8c92e4b2562e1d9eb97f0df9ba3b508258739cb013db2
learnmeabitcoin     ef235aacf90d9f4aadd8c92e4b2562e1d9eb97f0df9ba3b508258739cb013db2
learnmeabitcoin     ef235aacf90d9f4aadd8c92e4b2562e1d9eb97f0df9ba3b508258739cb013db2

3. Different data produces different results.

If you put unique data in to the hash function, the hash function will give you a unique result.

Even the smallest changes in data return wildly different results.

For example:

data                sha256(data)
----------------    ----------------------------------------------------------------
learnmeabitcoin     ef235aacf90d9f4aadd8c92e4b2562e1d9eb97f0df9ba3b508258739cb013db2
learnmeabitcoin1    f94a840f1e1a901843a75dd07ffcc5c84478dc4f987797474c9393ac53ab55e6
learnmeabitcoin2    b9638ef00b064055b5d0b408414be02f3ab66cce752c7ac3b7595b0fffaa6567
learnmeabitcoin3    c6fd80741e150fb7ee71453fb0a2a391261f6a0d4d60759b843639e6cbae7b91
learnmeabitcoin4    255da46dc8699fffd841b7c66a31eeb4f8eda8e1ca6850c7356376518f52d3c1

If different data returned the same result it would be called a “collision”, and it would mean the hash function was broken.

Where are hash functions used in Bitcoin?

1. Transaction Hashes

You hash transaction data to get a TXID (Transaction ID, Transaction Hash).

The ability to hash a long string of transaction data in to a short, unique string allows you to create a unique identifier for each transaction.

2. Block Hashes (and Mining)

You hash block headers to get a block hash.

So you can also create a unique ID for each block.
The fact that each hash result is random allows for the mechanism of mining.

3. Addresses

A public key is hashed (using both SHA256 and RIPEMD160) in the process of creating a bitcoin address.

The fact that you cannot work backwards from a hash result helps with the security of public keys when they are placed inside locking scripts.