Want to know how the highest level of security is implemented in blockchain? Hashing and Digital Signature are the important terms that bring desired security level in blockchain with cryptography. Let’s learn what is hashing and digital signature in blockchain.

Security is one of the prominent requirements in the present times, with businesses wondering about innovative approaches for safeguarding information. One of the most innovative solutions that have emerged recently for helping businesses in secure information exchange points towards blockchain. Blockchain technology brings functionalities of distributed ledger and ensures that unauthorized parties couldn’t see the information exchanged in a specific transaction. 

It uses cryptography to provide the desired security while bringing attention towards hashing and digital signature in blockchain. Both hashing and digital signature have a huge role to play in the blockchain landscape. The following discussion aims to shed light on the importance of hashing and digital signature for blockchain. 

The most important aspect in discussions around hashing and digital signature in blockchain primarily revolves around cryptography. Communication has evolved gradually over the years as we have come from pictograms to flash storage devices storing massive information. However, communications have always been following best practices of encryption to ensure that information is not visible to other individuals. 

Therefore, cryptography emerged as a vital solution for ensuring safeguards for sensitive information. Cryptography involves scrambling the original content of the message to a cipher before sending it to the recipient. The recipient could use keys for unlocking the cipher, and the keys are available only with the recipient. Therefore, any other party couldn’t intercept the communication in the course of its journey from sender to recipient. 

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What is Hashing and Digital Signature in the Blockchain?

Blockchain relies largely on cryptography as a major selling point. It is also interesting to note the definition of hashing in blockchain and the role of digital signatures in understanding how they fit in the blockchain equation. Let us start with hashing first. 

What is Hashing in Blockchain?

Hashing is the process of taking an unlimited amount of input data and leveraging it for the creation of specific amounts of output data. The input data does not have any fixed size, thereby offering considerable flexibility in the selection of inputs for hashing. In addition, the importance of hashing in blockchain security is visible in the requirement of hashing for adding blocks. You should also note that there are various hashing algorithms tailored for varying requirements of users. 

Interestingly, hashes have found a wide range of applications in various use cases, with the most prominent example referring to digital fingerprinting. Digital fingerprinting is just the same as an actual fingerprint, and the hashing in digital fingerprints serves as the best instrument for verifying the fingerprint. 

The hash helps in offering confirmation regarding the production of output from the hashing procedure. In addition, the hash also confirms that the output of the procedure has not been subject to any unwanted tampering. The verification process generally involves calculations for confirming matches between hashes and the originally published content. Any form of mismatch could clearly showcase evidence of modification or tampering in the output hash. 

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  • Applications of Hashing in Blockchain

The use of hashing in blockchain in such cases points out clarity on tamper-proofing. Every new blockchain begins with a genesis block which is responsible for capturing data regarding almost anything that has happened on the blockchain to date. As a result, the output of a hash function directly points out the most recent state of the concerning blockchain. 

It is also important to note that activities are added subsequently to the chain as they happen. Most important of all, the new blocks always capture details associated with the previous block. Any form of modification could change the hash of the chain, thereby helping in easier and precise identification.

Hashing in cryptography and blockchain is primarily a one-way function that features a properly crafted algorithm without any concerns for reversal of hashing process and exposure of original input. Therefore, hashing can provide a substantial advantage over the two-way function in encryption that enables encryption and decryption through the suitable keys or key-pairs. 

Another profound application of hash functions is clearly evident in data structures where you can find bloom filters or hash tables. In such cases, the objective of hashing focuses on faster data lookup rather than security. On the other hand, hash functions also find applications in the context of digital signatures where they are ideal for producing the same output for the same input with a deterministic approach. 

As a result, the use of hashing and digital signature in blockchain could help recipients in recomputing the output of a hash function with the same hash function. The comparison of the message digest with the transmitted digest could help in verifying that the message didn’t go through unwanted modifications in transit. 

Even if the message features minor differences in punctuation, content, or spacing, the message digest in the output would have radical differences. In addition, it is difficult to find out the level of difference between two different messages through comparison of the digest. As you must have understood, the smallest difference in inputs could result in a completely unique digest value. 

So, it is quite clear that hashing has a formidable significance for cryptography in the blockchain. However, the applications of hashing in blockchain have to follow certain important requirements such as,

  1. Input could feature variable length
  2. Output must have a fixed length
  3. The hash function for any specific input presents relative ease of computing
  4. Hash function features the collision-free trait, which ensures that you could not have two different messages that produce a similar hash value.
  5. Hash function is always one-way and clearly implies the extreme difficulty associated with determining the input by referring to the output.

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  • Hashing Algorithms

With a clear idea regarding the significance of hashing in blockchain, it is important to know about hashing algorithms. The secure hashing algorithm or SHA is the most common hash function recommended by the National Institute of Standards and Technology (NIST). The notable successors of SHA such as SHA-1, SHA-2, and SHA-3 have gained profound recognition for their capabilities. Let us take a look at their details.

SHA-1 could take input of practically any length and then generate a 160-bit message alongside processing messages in blocks of 512-bit size. If message length is not a multiple of 512-bit, then the SHA algorithm could pad up the message with data so that it could reach the next closest multiple of 512-bit.

SHA-2 is presently one of the favorite algorithms in the cryptography community, although with certain setbacks like in the SHA-1 algorithm. After its introduction in 2001, SHA-2 has been through substantial changes over the years with the arrival of four variants. The four different variants include SHA-256, SHA-224, SHA-512, and SHA-384, with SHA-256 being a widely adopted cryptographic algorithm. 

SHA-256 can create a 256-bit message digest through the use of 512-bit block size, while SHA-224 utilizes a truncated version of SHA-256 for creating a 224-bit message digest using the 512-bit block size. SHA-512 could create a 512-bit message digest by using the 1024-bit block size, and SHA-384 utilizes a truncated version of SHA-512. SHA-384 can generate a 384-bit message digest by leveraging a 1024-bit block size. 

The SHA-3 algorithms are the latest additions in secure hashing algorithms showing the importance of hashing in blockchain. SHA-3 came into existence in 2015 and fall on the same lines as MD5 algorithm standards. It has the capability to serve as a replacement for SHA-2 while also offering similar variants and hash lengths. The only difference of SHA-3 is that it presents possibilities of better security. 

  • MD2- Message Digest

The MD2 Message Digest algorithm came forward in 1989 as an alternative for offering secure hash functions for 8-bit processors. MD2 helps in padding up the message to the length of multiples of 16-bit and the creation of a 16-byte checksum. 

MD4 is an enhanced alternative to MD2 and provides padding for a message to a length that is 64-bit smaller than 512-bit multiples. Subsequently, it could process 512-bit blocks of the message in different rounds for producing a 128-bit message digest. 

MD5 is the latest version of message digest algorithm and could offer the same padding requirements as MD4. In addition, it brings some additional security features which end up reducing the speed of producing message digest. 

Digital Signature in Blockchain

Now, the next important point in our discussion would refer to digital signature in blockchain. Digital signatures are basically cryptographic proof systems that can help in establishing trust on the blockchain. Trust in the blockchain system could ensure proving that the message could originate from a particular source, thereby ruling out any concerns of hacking or other discrepancies. Digital signatures can be considered as the digital counterparts of stamped seals or handwritten signatures. 

However, they are capable of offering better security with the reduced possibility of identity theft or impersonation. Digital signatures follow the specific precedents of asymmetric cryptography by linking two different keys with mathematical links. The keys include a private key and a public key. It is possible to deploy a digital signature system with the help of a secure hash function. The importance of a digital signature in blockchain largely revolves around two primary objectives such as,

  1. Digital signatures ensure that the message received by a recipient has come from the sender claiming to have sent the information. The property is known as non-repudiation.
  2. Digital signatures also provide assurance to recipients about the fact that messages have not been through any modifications in transit. As a result, infrastructures can find better safeguards against malicious intermediaries or unintentional modifications.  

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Relationship between Hashing and Digital Signatures         

Now that you know ‘what is hashing and digital signature in the blockchain?’ it is important to find out the link between them. In the case of blockchain, a digital signature system focuses on three basic phases such as hashing, signature, and verification. Let us take a look at the working of a blockchain-based digital signature.

  • Step 1:

First of all, the blockchain hashes the message or digital data through the submission of data via a hashing algorithm. The algorithm helps in generating a hash value or the message digest with messages differing profoundly in size only to give the same length of hash values upon hashing. As we already know, this is the most fundamental trait in a hash function and exhibits a clear influence on digital signatures. Hashing is mandatory in most blockchain applications for the flexibility in using fixed-length message digests for the complete process.

  • Step 2:

The next step in the working of digital signature in blockchain refers to signing. The sender of the message must sign it after hashing of information in the message. At this point of the process, public key cryptography plays a critical role. Many digital signature algorithms offer unique mechanisms, albeit with the single approach of asymmetric cryptography. Since digital signatures are related directly to the content in each message, digitally signed messages are likely to have different digital signatures. 

  • Step 3:

The final step in the use of blockchain-based digital signature refers to verification. Recipients could easily check the validity of digital signatures through the use of a public key. The signature could work as a unique digital fingerprint of the concerned message. However, it is also important to pay attention to the secure storage and management of keys for avoiding unwanted circumstances. 

The applications of digital signature in blockchain could help in achieving the important results of non-repudiation, authentication, and data integrity. As a result, hashing and digital signatures have prominent contributions in improving the security of blockchain applications. 

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Bottom Line

On a final note, readers could understand the answer to ‘what is hashing and digital signature in the blockchain?’ carefully. The wide-ranging use cases of hashing and digital signature across the blockchain ecosystem could support different sectors. Some of the notable applications of hashing and digital signatures include the execution of financial transactions and agreements with high security and data integrity. 

The demand for blockchain applications is growing substantially. Therefore, a clear impression of the significance of hashing and digital signature in blockchain can help you leverage their potential. Learn more about hashing and digital signature, and how they related to each other for enhancing blockchain applications.

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