WHAT: Refers to the output of a cryptographic hash algorithm that secures PoW blockchains. The Bitcoin blockchain proof of work algorithm uses NSA’s SHA-256 (Secure Hash Algorithm) as part of its’ consensus process.

A parent hash algorithm (in this case SHA-256) is a one way function ensuring the original data it protects cannot  be re-generated from the child hash output. This output is a fixed alphanumeric (256 bit) string. SHA1 input-output example:


WHY: The SHA-256 hash algorithm generates “verifiably random” numbers that require a predictable amount of CPU effort by the mining community to solve (see hash rate). Blocks are continually solved by verifying hashes.

EXAMPLE: The first miner that solves the correct hash for a block wins a block reward of 12.5 BTC (in 2019 and half that in 2020). The block reward started at 50 BTC but it is continually halved after the discovery of every 210,000 blocks- which takes about four years.


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