The Hash: The Heart of The Blockchain

A hash is a mathematical function that takes an input of any length and outputs a fixed-size string of alphanumeric characters. Hash rates are the number of times per second that this function can be performed, and are used to determine the speed and power of a given cryptocurrency mining rig. Hashes and hash rates can greatly affect the success of a cryptocurrency mining investment.

Why is it important to be familiar with these terms?

How do the interpretations of these acronyms affect your investment in cryptos?

Can you influence their values?

What does Coin Difficulty mean?

The blockchain is the underlying technology that powers cryptocurrencies. As we’ve discussed before, the blockchain is a growing record of data about a certain entity, made up of units called blocks. The terms hash and hash rates refer to the process of adding new blocks to the blockchain.

Cryptocurrency coins are created through a complex mathematical computation called mining. Mining involves verifying data and adding it to the blockchain. When a miner successfully adds a block of data to the blockchain, they are rewarded with cryptocurrency. For example, at the time of this writing, miners who add a block to the Bitcoin blockchain are rewarded with 6.25 Bitcoins.

Advertisement

Do you need to understand the details of how a cryptocurrency is constructed in order to invest in it? I say no – you can simply buy and hold a coin without knowing the underlying details. However, if you’re interested in learning more about how these algorithms work, the information is publicly available. That’s one of the benefits of the blockchain.

If you want to fly an airplane, you need to completely understand all the principles of flight. If you want to be involved in cryptocurrency, it’s just as important to understand all the facets involved in its production.

Knowing how it works can help you develop an investment strategy and assist you in purchasing equipment that meets your needs.

The process, simplified, functions like this. When a ledger block is compiled, a copy of that block is given to all miners in the network. The block is also given a name, known only to the block itself. All computers have a copy of the same block but don’t know the name it’s been given. If your computer can guess the name of the block before any others, you win the prize, and the block is added to the blockchain. If you relate this process to Bitcoin, the prize is 6.25 Bitcoins. It’s just that simple.

Creating a name with limitless possibilities can take some time, so there are parameters in place. For example, with Bitcoin, the name is limited to a 256-bit alphanumeric code, which is still extremely large. To find the unknown name and/or value, the SHA-256 (Secure Hashing Algorithm 256) is used as a guessing method. The name of the block of data identified through this 256-bit alphanumeric code is also given a value. Your computer must create an alphanumeric integer that is equal to or less than the value of the name the block has given itself. Additionally, the number you enter cannot be the smallest one you can think of– there is a range of numerical values that are desired results. Lastly, all fields in this puzzle must be completed.

There is no way to predict the name of the integer, so computers have to guess. Depending on its components, a computer can guess up to a billion times per second. For perspective, a block of data is added to the Bitcoin blockchain approximately every 10 minutes.

A Hash is a block of data that is added to a blockchain. The name of the Hash is unique to itself and is used to identify it. The plural of Hash is Hashes. The hash rate or hash power is the number of times your computer components can guess the name of the Hash in a second.

Wa-la, you are now able to interpret and understand these terms, ratios, and symbols.

Advertisement

1 kH/s = 1,000 (one thousand) hashes per second

1 MH/s = 1,000,000 (one million) hashes per second.

1 GH/s = 1,000,000,000 (one billion) hashes per second.

1 TH/s = 1,000,000,000,000 (one trillion) hashes per second.

1 PH/s = 1,000,000,000,000,000 (one quadrillion) hashes per second.

1 EH/s = 1,000,000,000,000,000,000 (one quintillion) hashes per second.

The coin difficulty refers to how difficult it is to add a new block of data to the blockchain. The difficulty is adjusted through the hashing algorithm by adding or removing zeros to the Hash. Adding zeros makes it more difficult to solve, while removing zeros makes it easier to solve.

Learn more about Crypto here

Advertisement