Hash

The process of hashing, in the context of cryptocurrency, means taking a string of arbitrary data of any size and length, and running it through a function that produces an output or “hash” of data of a fixed size. In principle, this is done with a one-way function, that is to say, a computation that is very easy to perform but very difficult to reverse. More generally, hashes are how passwords are stored. If the hash is stolen, the password that was used to generate it (if sufficiently strong) is still safe. In this way, a password can be checked for validity without the need to store it in plaintext. Bitcoin uses a particular implementation of a hashing algorithm called SHA-256. A hash as described above can also be more accurately called a ‘cryptographic hash’.