When Bitcoin is brought up, most think about the digital currency, mining, and the Blockchain. Security is almost forgotten about. There is no focus on how data is secured in the transaction process during digital cash exchanges. The security parameters and functions behind Bitcoin are some of the cryptocurrency’s top strengths.
Satoshi Nakamoto originally released the Bitcoin White Paper back in 2008 and the goal was to create a peer to peer network that uses Proof of Work to verify transactions. Proof of work is a big part of Bitcoin’s trustless system. When you eliminate the third party, it loses a portion of security. In order to make an electronic cash peer to peer system safe, the transactions need to be secure. This is where the SHA-256 hash algorithm comes becomes a factor. Bitcoin’s electronic cash system uses SHA-256 as a signature for Proof of Work.
SHA-256 is one of the most secure algorithms used around the world. Secure Hashing Algorithms are functions that keep data secure. NSA originally designed the basis for the algorithm to encrypt messages sent over the internet. The data is encrypted by running data through a series of functions and process to get a defined key. Unlike older security algorithms there is no current way to reverse engineer the hash to get the encrypted data.
Securing transactions isn’t the only place with Bitcoin where the SHA-256 algorithm is used. Bitcoin blocks on the blockchain are mined by using computing power to solve SHA-256 hashes. Other cryptocurrencies like Digibyte and the Bitcoin hard fork, Bitcoin Cash. There is no security purpose in using SHA-256 while mining. That is all based on what the coins blockchain is built on. For example, some coins like Litecoin are mined by using the Scrypt algorithm. The same algorithm Litecoin used for its Proof of Work signature.
Google has even urged businesses to use the algorithm. Google has been a steady advocate for web security. Recently Google found a security breach in website Secure Socket Layer certificates issued by Symantec. All the certificates needed to be re-issued with SHA-256 hash encryption.
It is not surprising why Bitcoin ended up choosing the algorithm for the basis of the electronic cash system. Security has been a top priority and main selling point to using cryptocurrency to replace the current financial system. Using SHA-256 is a fine example that Bitcoin is here for the long run.
Article Posted: 07/31/2021 12:51:29 PM