1. A mathematical process which turns a large amount of data into a short, fixed-length output. 2. A checksum value unique to the underlying data. This sum is being searched by all the miners attempting to process a cryptographic block to be returned to the cryptographic network as a “proof of work”. The first miner to submit the correct proof of work is what initiates the creation and awarding on new coins to the successful miner. This is the random and complex mathematical formula used in the verification of blocks of transaction data in the process known as mining. Once the miner calculates the proper hash in a block, it is rewarded with coins and a percentage of the transaction fees embedded in that block. Achieving the right hash in a given block can take several tries and calculation adjustments. Some blocks, even though properly processed, may not “pay out”. The difficulty of calculating the hash in a block is set fairly high so that the rewards are not distributed to quickly. Mining helps create new coins and the mathematics is set so that the creation of new coins does not happen too quickly so as to destabilize the currency. Hashes are useful to Bitcoin because it is mathematically difficult to work out what the original input was by looking at the output. Furthermore, changing even the tiniest part of the input will produce an entirely different output.
Malone, J.A (2015). Glossary of Bitcoin Terms and Definitions. United States: Lulu Press, Inc
A cryptographic function which takes an input (or ‘message’) and returns a fixed-size alphanumeric string, which is called the hash value (sometimes called a message digest, a digital fingerprint, a digest or a checksum). A hash function (or hash algorithm) is a process by which a document (i.e. a piece of data or file) is processed into a small piece of data (usually 32 bytes) which looks completely random, and from which no meaningful data can be recovered about the document, but which has the important property that the result of hashing one particular document is always the same. Additionally, it is crucially important that it is computationally infeasible to find two documents that have the same hash. Generally, changing even one letter in a document will completely randomize the hash; for example, the SHA3 hash of “Saturday” is
c38bbc8e93c09f6ed3fe39b5135da91ad1a99d397ef16948606cdcbd14929f9d, whereas the SHA3 hash of “Caturday” is
b4013c0eed56d5a0b448b02ec1d10dd18c1b3832068fbbdc65b98fa9b14b6dbf. Hashes are usually used as a way of creating a globally agreed-upon identifier for a particular document that cannot be forged.