What is SHA-256?

Cryptographic hash functions are used to transform alphanumeric data into a compressed value that represents the original data. They can be considered as a type of one-way cipher, used to encode information but in a way that cannot be decoded, so it remains secure even in case of a breach.

In this way, hashing differs from encryption, which allows for data to be decrypted.

The security of a given hash function depends on how difficult it is to reverse-engineer the original information from the hashed output using brute-force attack tactics. Currently, SHA-256 represents the gold standard of secure cryptographic hashing, and as such, it’s widely applied in a range of information security scenarios.

What does SHA-256 mean?

SHA-256 derives its name from its origins and the size of the hash output it produces.

SHA stands for Secure Hash Algorithm, the name given to a group of cryptographic hashing functions developed and patented by the United States National Security Agency (NSA) and licensed royalty-free for public use.

256 refers to the fact that the hash output is 256 bits long, consisting of eight blocks of 32 bits each.

Features of SHA-256

SHA-256 is part of a set of SHAs known as SHA-2. The SHA-2 algorithms were developed as a more secure successor to their predecessors, the SHA-1 family, which generated smaller and less complex hash outputs. The SHA-2 set came about due to advancements in computing, which made brute-force attacks on the SHA-1 set more feasible.

In addition to being computationally infeasible to reverse-engineer, SHA-256 also meets other criteria required for a hashing algorithm to be useful. It is highly collision-resistant, meaning that it’s extremely unlikely that two different sets of data could ever generate the same hash.

It also generates two completely unrelated hashes from similar (but not the same) input data, so it’s impossible to use hashed outputs to trace patterns in inputs.

How is SHA-256 used?

The characteristics of SHA-256 lend themselves to various information security applications.

Password protection

A key feature of secure hashing algorithms is that the same input will always generate the same output. Therefore, they can be used to verify passwords in a way that doesn’t reveal the password itself.

For instance, a company can store the hashed versions of passwords, and when the user enters their password, the system creates a hash from it and verifies it against the hash it has stored. In the event of a cyberattack, only the hashes are revealed, and there is no way of reverse-engineering the passwords themselves.

Digital signatures

SHA-256 is also used in digital signatures to authenticate and secure data like documents or messages. If someone wants to send a secure version of a document that can be authenticated as the original, they can generate a hash from it and encrypt the hash using a private key.

The recipient of the document can then decrypt the hash and verify the version of the document by confirming the hash is a match.

What is the significance of SHA-256 in cryptocurrency?

SHA-256 is a fundamental component of several cryptocurrencies, including Bitcoin itself, and forks including Bitcoin Cash. In the process of Bitcoin block production, each block has a header that contains a specific set of information, including a hash of the previous block header.

In this way, Bitcoin produces a chain of blocks where each is linked to its predecessor via the hash in the block header. Any change in a single block would result in the creation of an entirely new hash, altering the hashes of any subsequent block. As such, SHA-256 underpins the immutability of the Bitcoin blockchain and is a key component in its security.

SHA-256 is also used in the production of the nonce (or “number used only once”), the value of which Bitcoin miners must find to successfully mine the next block.

Finally, SHA-256, along with other cryptographic algorithms, is also a component in creating Bitcoin public keys.

The future of SHA-256

SHA-256 has proven resilient enough to protect against brute-force attacks by modern computers. However, developments in quantum computing have brought speculation that an unprecedented advance in processing speed could compromise the security of SHA-256. Effectively, the time taken to launch a brute-force attack could be greatly reduced to the point of feasibility.

However, this doesn’t necessarily mean that SHA-256 or Bitcoin are under any immediate threat from quantum computing. The technology is still too underdeveloped and expensive to deploy, while researchers are already developing algorithms that demonstrate quantum resistance.

Therefore, SHA-256 remains secure enough to protect the world’s passwords, digital signatures, and the world’s largest cryptocurrency by market cap, BTC.

SHA-256 essentials

• SHA-256 is a widely adopted secure hashing algorithm developed by the US National Security Agency.
• It’s used globally in applications that include password protection and digital signatures.
• SHA-256 also underpins the security of the Bitcoin network by generating a unique hash for each block header, which are used to create an immutable chain.