A hash function takes any amount of data in and returns a fixed length amount of data back known as a hash. Changing even one character of input data will return an entirely unique hash. There are many different types of hash functions, however Bitcoin uses SHA-256 for it’s speed and efficiency. SHA-256 is used to generate bitcoin addresses, transaction id’s and block hashes.
Since the output of a hash function can not be predetermined, bitcoin mining utilizes the SHA-256 hash function as a lottery to determine who will create the block and win the block reward.
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