Hash Functions Used in Bitcoin
The Bitcoin consensus algorithm is based on a cryptographic system that ensures the integrity and security of the blockchain. Hash functions play a key role in maintaining the confidentiality and non-repudiation of the network. In this article, we will look at how the block header is hashed to generate the next Bitcoin block.
Hash Functions
The Bitcoin protocol uses two main hash functions:
- SHA-256 (Secure Hash Algorithm 256)
: This is the basic cryptographic hash function used in most Bitcoin transactions.
- Merkle Tree: This is a probabilistic data structure in the form of a digital tree that allows us to verify the correctness of the blockchain.
Block Header Hash
To generate a block header, perform the following steps:
- Calculate SHA-256 hash of transactions from previous block
The hash of transactions from previous block is used as input to the SHA-256 hash function.
- Add Merkle root and nonce to output
A random nonce (unique number) is added to the SHA-256 hash output along with the Merkle root and other relevant data.
Sequence of Operations
Here is a step-by-step description of how the block header is hashed:
- SHA-256 hash of transactions in previous block: Calculate the SHA-256 hash of transactions in previous block.
- Add Merkle root and nonce: Combine the Merkle root, nonce, and SHA-256 hash from the previous block to generate a new value.
- Hash: Apply the SHA-256 hash function to this new value.
Calculate the full hash
To give you an idea of what happens behind the scenes, consider the following example:
Suppose we have three blocks: Block A, Block B, and Block C. The transaction in block A looks like this:
Transaction A (txid = 1) - value = 10
Here are the steps to calculate the transaction hash of block A:
- Calculate SHA-256 hash:
SHA-256(10)
- Add Merkle root and nonce: The Merkle root is generated using a randomly selected Merkle tree, and the nonce (0x1234567890abcdef) is added to the result.
- Hash: Apply the SHA-256 hash function to this new value.
The resulting hash of the transaction in block A will look like this: 0...012345678901234567890abcdef
Similarly, we can calculate the hashes of blocks B and C:
- Hash of block B:
- Transaction in block B
Transaction B (txid = 2) - value = 20
Hash:
- SHA-256(20)
- Add Merkle root and nonce:
0...123456789012345678901234567890abcdef
- Hash:
0...01234567890123456
- Hash of block C:
- Transaction in block C
Transaction C (txid = 3) - value = 30
Hash:
- SHA-256(30)
Add Merkle root and nonce: 0...fedcba987654321098765432109876*
- Digest:0…01234567890123456
The resulting hash for the transaction in block C will look like this:0…01234567890abcdef`