By Larry Wright
Have you ever made a trade using a dedicated cryptocurrency? If so, then you must have some kind of knowledge when it comes to the security of cryptocurrencies, as these are one of the most secure financial elements out there.
The whole infrastructure that the cryptocurrencies and their blockchain derivatives stand for is elegant from top to bottom. First off, the whole system is completely decentralized, which means that there are no centralized bodies that govern the system or implement changes across various attributes of the platform.
Whenever a user requests the processing of a transaction, the request is received by the network validators or validating nodes that are simply people who are providing the network with their processing power, thus increasing the transaction throughput of the whole network.
These validators then make sure that the request is indeed legit and comes from a unique source; after the initial scrutiny, the transaction is then processed, and all the data is validated in real-time, and when the transaction is subjected as completed, it is then transferred into definitive blocks over the blockchain environment of that particular cryptocurrency.
Blocks run in a linear beads-like fashion, securing the data from the genesis block all the way to the most recent transaction that has taken place on the blockchain.
To secure the data of a transaction, hashing is implemented, which is a kind of security system put into place to make sure that all the transactions get completed in real-time without any errors or misconceptions of any kind. If you didn’t know much about hashing, then now is your time to educate yourself while moving further into the crazy space that is the crypto market.
Hashing is a process that oversees the generation of a fixed size output that comes from an input having a variable size. Mathematical formulas are implemented to make sure that the transition goes as smoothly as possible; these formulas are known as hash functions, and these are implemented as the hashing algorithms.
There is a common misconception that all hash functions out there must involve the prospect of cryptography, but that is not the case.
There are some cryptographic hash functions that are implemented by some cryptocurrencies in their own private capacity, and this is because of the hashing technology and these algorithms that cryptocurrencies remain extremely efficient, with top priority to data integrity and security of all transactions taking place under its radar. This allows for those cryptocurrencies to remain distributed through and through.
There is a small catch here, all the cryptographic hash functions implemented by different cryptocurrencies are deterministic in nature. This means that the output will always remain the same as produced by the hashing algorithm should the input also remains the same. The output is known as the hash; if the input changes at a given interval, the output will not remain the same.
The very hashing algorithm for these programs is served as a one-way function which means that you can revert these elements without imparting a generous amount of computing throughput for the reverse process to commence. You can easily create the output from the input that you have at hand, but it would be extremely difficult to generate the input from the output.
It means that once a transaction has been completed, the initial circumstances such as where the transaction originated from, who was the person who did engage with the transaction, who was the sender and who was the receiver, and other such data are completely restrictive in nature and is redacted.
When it becomes difficult to find the input for a dedicated transaction, it is presumed that hashing algorithm in practice is extremely secure, which makes that particular crypto blockchain extremely efficient with iron-grade security.
Working of Hash Function
Usually, it depends on the size of the transactions when it comes to determining the hashing size, but the output size for a variety of hashing algorithms is presumed to be a constant always. Let’s take into account two different examples here, the SHA-256 algorithm and the SHA-1 algorithm.
The first one is bound to leak out an output of 256 bits always; it can’t increase or decrease the size or the number of bits in each and every output. In a similar fashion, the SHA-1 function will only produce the 160-bits element, and that is a fixed proportion.
Even if there is a minimalistic change in the input for a dedicated hashing algorithm, the output is going to change gravely because the input did in the first place. The size of bits, on the other hand, will remain constant at 256 bits in the case of the SHA-256 bits producing function.
You might be wondering what is SHA? Well, it is the secure hash algorithm. It has different groups and based on the need and performance of these hashing functions, multiple of these algorithms are attributed and directed into specific groups labeled according to the type of hashing function these can perform.
Importance of Hash Functions
From the data above, you might have perceived hash functions as the commonly known elements which make sure that any and every transaction taking place in a decentralized fashion over a dedicated blockchain is secure from every possible error while making data management easier and more efficient.
But this is not the only use case for these hash functions as these can perform various other tasks, including but not limited to large file analysis and providing database lookups for easier tracking of a particular transaction in question.
Other than that, these hash functions are also being used in various applications surrounding information security, including digital fingerprinting and authentication of messages received from a viable source.
For Bitcoin, these hash functions are essential elements because, without them, the whole mining process would be kaput because consensus and validation are required at each and every step, and without a proper hash function dividing the load, it is just not possible at all, other than that this also plays a significant role when it comes to generating keys for crypto wallets and new addresses for the sake of executing transactions.
All of these use cases have been listed here for your reference when it comes to hash functions and where they are used. A more prominent use case, however, for hashing is when dealing with giant bounds of data or information presented to a computing body in real-time.
Suppose that in a blockchain medium, tons of transactions are taking place simultaneously, and each and every one of these needs to be validated and documented as a proof that this specific transaction did actually take place on that specific blockchain, and here is the proof of that or receipt of the transaction being validated.
Now instead of categorizing this information right away, these first could be run through a proper hash function which will not only secure each and every bit of that particular transaction but would also help in verifying that the data presented here is indeed accurate.
This happens because of the deterministic element for these hash functions, as discussed earlier, where every input results in condensed output which doesn’t change in terms of the data size and the overall information processing. Therefore the need to store these huge amounts of data or to remember them is minimized. Hashing, on the other hand, is also extremely beneficial when it comes to the working of blocks within blockchain technology.
Hashing is widely used with the Bitcoin blockchain, and most of it is used within the prospect of mining, where each and every transaction that is validated and subjected into definitive blocks is first passed through a hashing function to make sure that the validator of the transaction itself and the output in terms of the validated data are all secure and sound.
This way, this huge block of information is condensed into a tiny segment which is then added to the definitive blocks of blockchain function; other than that, another requirement of hashing here is to produce cryptographic links that are tethered with each and every block moving all the way back to the genesis block.
Cryptographic Hash Functions
The hash function is deployed or used specifically for transactions as a cryptographic hash function. This is what makes your transaction completely anonymous and redacts almost all of the important details and information that could be used by hackers or cybercriminals who can track you down as either a sender or receiver of the transaction for a dedicated block carrying your transaction.
If you wish to break a cryptographic hash, then you do require a lot of computing power; some say no computing power could match that of a cryptographic hash except for quantum computing. A lot of computing power might be required to break the bonds of a cryptographic hash and to force it into giving away all the relative information regarding a particular transaction that is specifically being protected by that very hash function.
You could say that it is quite improbable for anyone to create a cryptographic hash function because to be able to revert such a function, they would require to guess the input using a trial and error mechanism until an output of the same standard is produced and that is highly unlikely because there are so many guesses and no one could manually guess the true input except of course if they are using a quantum computer then this is a whole other story.
Another thing that you must know about is collision within the cryptographic hash functions; this is a process or an outcome when different inputs are producing the same output. This is highly unlikely but still can happen, and therefore this phenomenon is termed a collision.
There are three dedicated properties that each and every hash function must have for it to be considered secure. These are the collision resistance, preimage resistance, and the second preimage resistance.
The collision resistance makes sure that there aren’t any two practical inputs that can produce the same output, thus making the whole cryptographic hash function as secure as it could be. Next up is the preimage resistance, which makes sure that the hash in question can’t be reverted, i.e., finding the correct input for a given output.
Last but not least, the second preimage resistance makes sure that no other second input can be found that has the ability to produce the same output as the present hash function.
Mining and Hash Functions
As stated earlier multiple times, cryptographic hash functions are a priority as a technology because of their extensive use in Bitcoin mining. Hash functions are required here not only to validate the transaction by a node validator and subject it to a definitive block but also to make sure that the validators are playing a fair game and not taking on more transactions than they can process for the time being.
Other functions of these hash elements include checking balances across various accounts, linking the inputs and outputs of various transactions, and the hashing transactions within a definitive block for the sake of developing a Merkle tree.
This is one of the reasons behind the security that blockchain for Bitcoin enjoys because miners out there do perform a variety of these hashing operations for the sake of finding a valid solution for the next block, which will be formulated and linked to the most recent one. This is done when the volume of transactions rises, and the throughput is at its very minimum to facilitate this constant flux of transactions coming to the network.
A minor goes through various difficulties developing the hash value for the block on which they are working. The only thing is whenever the hash function for that specific transaction has been validated, the transaction itself will be subjected to a specific block linked properly with the block itself and all the information that it carries.
Each hash function relies on the number of zeroes that will help in the validation of the output; the output must contain a specific number of zeroes to be considered valid, and how many of these zeroes are required is already programmed into the hash function put in charge of validating the transaction.
Zeros also play an integral part in determining the overall mining difficulty. If there are more for a dedicated output hash, then it only means that it will be extremely difficult to validate that particular transaction. Mining difficulty, on the other hand, will vary depending on the hash rate that has been devoted to that specific network for the time being.
So, in pursuit of getting a transaction validated, these miners have to try various inputs which produce a certain output having a particular number of zeros for the hash that this specific transaction has. If the output by any chance is not what was advertised beforehand by the hash function, until then, the block would not be validated, and neither would it be created nor become an integral part of that specific blockchain.
Hashrate is also a measure of just how much computing power is being harnessed by Bitcoin mining for a specific transaction or validation of a particular block. If by any chance, the hash rate of the Bitcoin network is on a roll, the Bitcoin protocol will sense that automatically and will be adjusting the mining difficulty accordingly to make sure that the average time period required to mine a specific block remains equivalent to about ten or so minutes.
On the other hand, if a scenario is presented where multiple miners stop mining altogether, then the hash rate will drop evidently, but the mining protocol will then adjust the mining difficulty accordingly, which would eventually make mining easier, and the rewards will also be extremely generous.
It is worth noting here that no miner needs to ever find collisions for a dedicated hash function because of the involvement of multiple hashes these can generate, registering them as a valid output.
Therefore multiple solutions exist for a specific block, and to solve the mining problem that any minor is facing, they just need to find one of these available solutions, which would evidently be selected by the threshold which was earlier calculated by the mining difficulty.
You might be thinking, what if a Bitcoin miner defrauds the system and gets their way? The whole Bitcoin mining environment is foolproof to that logic; miners can’t cheat the system because of the fact that they have invested tons of money into Bitcoin mining, and cheating the system is equivalent to bearing heavy financial losses, and no one is ready for that not today, not tomorrow.
It also means that if the number of miners mining on the Bitcoin blockchain increases as more enthusiasts are joining the network each passing day, then it will evidently make the security of the whole blockchain more elementary and elegant.