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An algorithm that transforms a given amount of data (the "message") into a fixed number of digits, known as the "hash," "digest" or "digital fingerprint." Hash functions are a fundamental component in digital signatures, password security, random number generation, message authentication and blockchains. A hash can also be used to avoid the risk of storing passwords on servers that could be compromised (see zero proof example). See RSA and hashing.
One-Way Processing
Also called a "one-way hash function" because it is nearly impossible to turn the digest back into the original data. It is also exceedingly rare that two different inputs can result in the same output.
Blockchain Integrity
This one-way processing guarantees that existing blockchain crypto balances and smart contract code cannot be altered. All transactions in a block are hashed into the subsequent block creating a chained linkage, and any alteration to an existing block breaks the chain (for details, see blockchain). See Merkle tree, HMAC, digital signature, MD5 and hash.
Solve the Bitcoin Puzzle by Hashing
Bitcoin "miners" combine newly created transactions from wallets and exchanges into a block, and because Bitcoin uses the proof-of-work (PoW) algorithm, miners must solve a mathematical puzzle (see illustration below). The first to do so earns the right to add the new block to the blockchain and collect fees and new coins. This proof-of-work (PoW) system was also used by Ethereum prior to switching to proof-of-stake (PoS) in 2020. See proof-of-work algorithm, Ethash and Ethereum 2.0.
With specialized hardware executing trillions of hash computations per second, it can take a single machine years to come up with the required hash, which is why large miners and mining pools use hundreds of machines (see miner hardware and pool mining). So much hash processing takes place mining Bitcoin worldwide that the electricity could power a small country (see hash rate). See crypto mining.
The hash value guarantees only that it is mathematically equal to the data it has hashed. If the data are changed in any way, that same hash cannot be generated. No matter how large or small the input, the output of a hash algorithm is fixed in size; for example, Bitcoin hashes are 256 bits long. See SHA.
The puzzle is finding the random number that, when added to the block's header, generates a hash with a target number of leading zeros. Generating new numbers trillions of times per second, the miner hardware attempts to find the hash with the desired result.
The Bitaps website shows Bitcoin block creation in real time. In this example, AntPool won the award for block 753673. The 19 leading zeros were the puzzle difficulty level at 17:38 UTC on 9-11-2022. Bitcoin adjusts the number of zeros up or down every 2,016 blocks to keep transactions flowing at one new block approximately every 10 minutes. See crypto stats.
I'm an enthusiast deeply immersed in the world of blockchain technology and cryptographic principles, and I've actively engaged with the intricate details of concepts like hash functions, one-way processing, blockchain integrity, and the mechanics of solving cryptographic puzzles in the context of Bitcoin mining.
Let's delve into the essential concepts mentioned in the article:
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Hash Function: A hash function is an algorithm that transforms a given amount of data (the "message") into a fixed number of digits, known as the "hash," "digest," or "digital fingerprint." Hash functions are foundational in various cryptographic applications such as digital signatures, password security, random number generation, message authentication, and blockchains.
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One-Way Processing: Also known as a "one-way hash function," it is extremely challenging to reverse the process and derive the original data from the hash. Additionally, it is exceedingly rare for two different inputs to produce the same output.
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Blockchain Integrity: The one-way processing property ensures the integrity of a blockchain. Transactions within a block are hashed, creating a chained linkage. Any attempt to alter a block would break this chain, preserving the immutability of the blockchain. This feature is crucial for maintaining the security and trustworthiness of cryptocurrency transactions.
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Bitcoin Mining and Proof-of-Work (PoW): Bitcoin miners combine transactions into blocks and employ the proof-of-work algorithm to solve a mathematical puzzle. This involves finding a specific hash with a predefined number of leading zeros. The first miner to solve the puzzle adds the new block to the blockchain and is rewarded with fees and newly created coins. The PoW system, involving trillions of hash computations per second, secures the Bitcoin network.
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Hash Rate: The hash rate represents the speed at which a mining machine performs hash computations. The collective hash processing in Bitcoin mining is so extensive that it consumes a substantial amount of electricity, comparable to that of a small country.
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Hashes Are Fixed in Size: Hash algorithms produce fixed-size outputs regardless of the size of the input data. For instance, Bitcoin hashes are 256 bits long. This fixed size ensures consistency and reliability in cryptographic applications.
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Solving the Bitcoin Puzzle: Miners attempt to find a specific random number that, when added to the block's header, generates a hash with a predetermined number of leading zeros. The difficulty level of the puzzle adjusts every 2,016 blocks to maintain an average block creation time of approximately 10 minutes.
Understanding these concepts provides a comprehensive insight into the intricate workings of blockchain technology, Bitcoin mining, and the cryptographic principles that underpin the security and functionality of decentralized systems.
