Understanding Bitcoin: Hashcash

Hashcash. The history, functions, and features.

BitcoinBitcoin uses hashcash functions such as Proof and Work for mining core. All Bitcoin mine-workers or ASIC equipment uses their efforts creating hashcash proof-of-work. This becomes a voting process for a blockchain progress. It also checks all payments is a blockchain. Hashcash uses the hash service as a building block.

The history of hash cash

The service is was discovered back in 1997. The creator of this very service became Dr. Adam Back who offered to use the function for using anti-DoS. Also, the function had to prevent a private service for forwarding emails and prevent mail2news gateway abuse. The function also provided anti-spam for email and common regulations of abusing the network.

Nowadays, Bitcoin uses the hashcash function. However, the option was before used by RPOW. It was a Bitcoin forgoer discovered by Hal Finney. He used hashcash to search for coins. Some others network’s precursors such as B-money and Web Dai used to utilize the function to search for coins.

The choices

The initial algorithm that was created in 1997, hashcash used SHA1, however, it is too weak for today’s processes. Still, it is quite big but it may give problems when regarding resistance of the hashcash preimage. Bitcoin that was released in 2009 used SHA256. Bitcoin is built in 128-nit safeness because it is using 256-bit ECDSA. To choose SHA256 is a wide choice that is considered a more moderate way.

Double hash

Bitcoin utilizes two iterations of harsh because of a possible system’s attack. SHA1 can no longer provide a decent security and ensure that they system will not have attacks. A possible attack on SHA256 does not exist because its construction protects the application from double SHA256. This is what makes Bitcoin so strong and reliable. This is a method of protecting future cryptanalytic growths.

What will happen to hash in the future?

Maybe Bitcoin will use SHA3 for protecting the system. The developers believe that SHA3 may work excellently against a double call of SHA256. As you can see, the system’s protection was not as good as now which made the network change functions. However, it seems like a new SHA3 may become a great solution for network’s reliability and safeness.

One of the aspects, why SHA3 can be relevant for the system, is some discussions about making SHA3 stability to attacks not so strong and bring it to 128-bit. The urge to do so is a small gain from the maintenance. Still, some people believe that this offer will be risky and can have a negative effect on the network. It would be smarter to use SHA3 but with 256-bit resistance.

Risks of cryptanalytic

Another problem of SHA3 is because it will disable all existed equipment such as Bitcoin and ASIC hardware. This will be a huge change in the system still it provides a great protection for the system. However, there are not risks for SHA1 or SHA256 to be attacked. Therefore, there is no motivation for the system to have cryptanalytic changes. One of the side-effects that can come after switching to SHA3, that the system will use more memory capacity. This may lead to ASIC be no longer profitable.

Functions provided by Hashcash

The method of hashcash is quite simple to understand it. The main idea is based on the safeness of cryptographic hashes. They are developed to make it hard to invert. Once you find one hash, everyone will be able to check it effectively.

The very first version – the version 0 that was released in 1997 used a partial pre-image. The version 1 that was created in 2001 used partial images of a chosen string but not numbers. This was made for convenience. As a result, all partial images effective and can be used for the system’s operation.


If a partial image is random, this proof-of-work is disconnected and has no sense. So, every single user can see you have done some job but no one can know why, therefore, customers can use the same scheme for various services. To connect proof-of-work to the service or a target, hash much include the string of service. It includes a domain name, the buyer’s electronic address and the block in the blockchain.

Another problem appears when a few people search for coins using the same string. They should not start with the same x, otherwise, they can get the same proof. It means that everyone who can see it will see it as a copy of the same work. Therefore, the first one who copied will get a reward but others will get a refusal to be rewarded.

To avoid such risk and not waste the time and effort on the work there should be a random starting point. For example, it is possible if to make 128-bit insistent for two customers, so they will not be able to start from the same point. This is what the version 1 does. In general, the string of service is a coinbase and it contains the reward address of the receivers, as well as payments that can be checked in the block.

Bitcoin does not have the initial x point and repeatedly uses the receiver’s reward address as a randomization factor. This helps to avoid the collision of the initial point. It also saves 16-bit space in the coinbase. To ensure confidentiality, the mine-worker will use another reward address for every single successful block.

Bitcoin needs a more precise work than the initial function of hashcash were offered. Bitcoins requires a dynamic and reliable operation with the accuracy of the 10-minute block.

Cryptographic safeness

Hashcash offers the safery margin in the basic conditions. Also, there can be other ways or safeness such as log2. The speed of Bitcoin work is called the hashrate of the organization. Usually, the interval of the goal block is 10 minutes and can be changed into cryptographic security like log2.

Bitcoin has another complication that is needed for work, so in the current system and it is expected that the block will be digged every 10 minutes. It will be a minimum work unit. The complication of Bitcoin is easy when it is converted into a cryptographic safeness.

Maybe it will be easier to overcome difficulties in the scale log2 and make it more likely to be compared with other cryptographic safeness ideas. The system makes 62-bit every 10 minutes and in more than five hundred thousands more powerful than DES.

The mine-workers’ confidentiality

For a mine-worker to be confidential it should use another address for reward for every block and after put the counter on zero again. The Bitcoin counter has to be invisible, otherwise, you will discover your mining power, and if you will have a big mining power you may discover who owns a coin.

If a mine-worker uses the same address for reward for all users than the risk of customers to do the same job immediately appears. To avoid doing the same job, mine-workers offers a certain job for the customers. However, it creates the needless connection between two ends. It means that the mine-workers do not check their own blocks that do not work anyway.

The latest version of mining protocol allows customers to add their own blocks definition, however, it does not require round trips to offer working places. As long as a new protocol chose extraNonce, it works as a random starting factor, therefore, there is no point to contact the pool and spread the work. The pool can have an address that should be published and the mine-workers can just for their work.

Proof-of-work scrypt

Initially, scrypt was not created for checking the work. Proof-of-work service is very expensive, still, it cannot be used for effective and publicly checked proof-of-work. Hashcash with the internal hash function Scrypt is a very important derivation for converting users’ code phrases into keys.

The reason why people can choose Scrypt is that the internal Scryps uses more memory, therefore, the advantage of GPU is decreasing while passwording if comparing with other processors. There is only internal Scrypt is used. The access to the internal Scrypt happens by installing the iteration parameter for one iteration. Therefore, the function of key-stretching is not used at all. Another reason why the function cannot be utilized is that it needs big expenses. The memory capacity that is needed for Scrypt is 128 kB.

Hashcash SHA256 or Hashcash Scrypt?

For example, the memory capacity of 128-bit Scrypt memory does not harm Linux for centralization of mining power if users do not have an access for ASIC. Hash SHA256 is very simple, therefore a skilled user with his own savings can design chip-fabricator. A lot of people can do it because it is really simple. Hash Scrypt is a bit more complicated way and is worse for centralization.

The advantage of Hash Scrypt is because it offers a slower speed from ASIC maintenance. Scrypt is not really reliable for memory capacity. Theoretically, Scrypt could have offered a minimum power capacity but more work. The temporary memory could have been optimized to find a fair memory capacity for using it. It is really possible that a fair amount would not have been less than 128 kB.

Another shortcut of Scrypt is that it provides a much slower check comparing with SHA256. Therefore, it will take more time to verify all payments done by the network’s users.