Why Are Hashes Important For Cryptocurrency

Why are hashes important for cryptocurrency

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What is a Hash and why is it Important?



What is a Hash?

What are Hash Rates? Hashes And Hash rates are an integral part of the cryptocurrency marketplace. Hashes and Hash rates can greatly affect the success of a cryptocurrency investment.


  • Why do you need to be familiar with these terms?

  • How does the interpretation of this acronym affect your investment in cryptos?

  • Do you have the ability to increase or decrease their values?

  • What does Coin Difficulty mean?


The blockchain is at the core of cryptocurrency value.

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As we’ve discussed earlier the blockchain is an ever increasing compilation of data about a particular entity, made up of units called blocks. The terms Hash, and Hash Rates have to do with the addition of those blocks to the blockchain.


Cryptocurrency coins are created through a very complex mathematical computation. The process of adding a block of verified data to the blockchain, has been given the term mining.  Mining sounds simple in theory, but in actuality it takes an astronomical amount of computing power to achieve this result.

When a miner achieves the objective of adding a block to the blockchain that miner is rewarded with cryptocurrency of the blockchain he is mining. At the time of this writing, mining a block of data to the bitcoin blockchain entitles you to a reward of 12.5 Bitcoins.


Do you really need to know how all the bits and bytes of a cryptocurrency are constructed to create a coin?


I say no if your intention is to own cryptocurrency for investment purposes.

Why are hashes important for cryptocurrency

But you should understand the principles of its makeup. If you really want to undertake the time to learn how these algorithms were construed and formulated the information is public, that’s the beauty of the blockchain.


Look at it this way, if you plan to buy a car, it helps to know how it works.

Cryptocurrency Algorithm – Why Is It Important In Mining?

That way you can buy a car with an engine and accessories that cater to your needs. If you plan to buy a cryptocurrency you should know how it works as well.

What is Hashing on the Blockchain?

Your investment may be considerably more than the price of a car, along with a potential for gains that can buy you a fleet of cars.


The process over simplified and accurate works like this. When a block of ledger entries is compiled a copy of that block is given to all the miners (computers) in the network.

Why are hashes important for cryptocurrency

The block of data is also given a name that it is only known by the block itself. All the computers have a copy of the the same block, they just don’t know what name that block has given to itself.

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If your computer can guess the name of the block before the other computers, you win the prize and the block is added to the blockchain. If you relate this process to Bitcoin, the prize is 12.5 Bitcoins. It’s all just that simple.


It could take a while to figure out a name with limitless possibilities.

What Is Hash Rate?

Therefore there are some parameters. With Bitcoin the name has been limited to a 256 bit alphanumeric code, which is still extremely large.

The SHA-256 (Secure Hashing Algorithm 256) is the guessing method used to find the unknown name and / or its value.

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The name of the block of data identified through this 256 bit alphanumeric code is also quantified with a value. Your computer must create an alphanumeric integer of this 256 bit alphanumeric code that is equal to or less than the value of the name the block has given to itself.

What is a hash function?

And you can’t just enter the smallest number you can think of, there is a numerical value range of desired results. All the fields of this puzzle have to be full.


There is no way that this integer can be calculated so all the computers selectively guess what the name will be.

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And since its a computer, depending on its components, it can guess between than 10,000,000 to 1,000,000,000 times in a second and more.

To give you some perspective as to how often this puzzle is solved, a block of data added to the blockchain of Bitcoin occurs approximately every 10 minutes.


The generic name of a block of data to be added to a blockchain is called a ‘Hash’. Even though the actual block name is unique to itself until that name is guessed it is called a ‘Hash’ and its plural ‘Hashes’. The amount of times your hardware configuration of computer components can guess the Hash’s name in a second is called the ‘Hash Rate’ or ‘Hash Power’.

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Thus the interpretation of these ratios and symbols.


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.


What does coin difficulty mean?


The Hash (the name of the block) is sometimes made more difficult to guess.

This is done in order to maintain the delicate balance of adding a block of data to the blockchain every 10 minutes.

Why are hashes important for cryptocurrency

Simply put, this difficulty is accomplished through the hashing algorithm by adding zeros to the Hash and removing them. Adding a zero to the Hash makes it more difficult to solve (guess). Removing the zero makes the Hash easier to solve.