Cryptocurrencies 2. How Hashing Puts the Crypto in “Cryptocurrency”

There are several conceptual pieces that are put together to make the working Bitcoin digital currency. The data which defines Bitcoin transactions is stored in a data structure called a blockchain.  A key feature of blockchains involves cryptographic “hashing”. That is the focus of today’s post.

A hash function is any function that can be used to map initial data of arbitrary size to fixed-size values. The initial data may be called the key or the message.  The values returned by a hash function are called hash values, hash codes, digests, or simply “hashes”. A common use for hashing in the past has been to do large-scale data storage and retrieval more efficiently, as described in Wikipedia. That link also discusses how some actual hashing calculations are done.

Here we will focus on cryptographic applications of hashing. For this purpose, hash functions are chosen which are for all practical purposes one-way. It is straightforward to start with the “message” and compute the hash. But it is not feasible to start with the hash and back-calculate the initial message, even if you know the algorithm used for the hash function. Typically the only way to find the message is to run a brute-force search of all possible inputs until you find a match to the output hash.

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Cryptocurrencies, 1: What Exactly Is Bitcoin?

Everybody knows that Bitcoin is a “digital currency”. But what does that really mean, and what is Bitcoin really good for? Who developed it? Turns out, oddly, that we don’t actually know. Can you buy a pizza with it? Turns out that perhaps the most famous pizza purchase of all time was made with Bitcoin.

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