What is Hashing & Digital Signature in The Blockchain?

(elegant music) – Hi everyone, today we
are going to be talking about the word Blockchain
and breaking it down to understand what does it mean when someone says Blockchains. We’re gonna take the time to
understand the cryptography behind the Blockchain technology. So, there are two main
cryptographic concepts that underpin Blockchain technology. The first, is hashing and the
second is digital signatures. So, what is hashing? Hashing refers to the concept of taking an arbitrary amount of input data, applying some algorithm to it and generating a fixed size output data called the hash. The input can be an any number of bits that could represent a single character, an mp3 file, an entire novel, a spreadsheet of your banking history, or even the entire internet. The point is that the input
can be infinitely big. The hashing algorithm can be
chosen depending on your needs and there are many publicly
available hashing algorithms. The point is that the algorithm
takes the infinite input of bits, applies some
calculations to them, and outputs a finite number of bits, for example, 256 bits. So, what can this hash be used for? A common usage for hashes
today is to fingerprint files, also known as checksums. This means that a hash is used to verify that a file has not been tampered with or modified in any way not
intended by the author. So, if wikileaks, for example,
publishes a set of files along with their MD5 hashes,
whoever downloads those files can verify that they are
actually from wikileaks by calculating the MD5 hash
of the downloaded files. And, if the hash doesn’t match what was published by wikileaks then you know that file has
been modified in some way. So, how does the Blockchain
make use of hashes? Hashes are used in
Blockchains to represent the current state of the world. So, the input is the entire
state of the Blockchain, meaning all the transactions
that have taken place so far. And, the resulting output hash
represents the current state of the Blockchain. The hash is used to
agree between all parties that the world state is one in the same. But how are these hashes
actually calculated? The first hash is calculated
for the first Block, or the Genesis Block, using the transactions inside that Block. The sequence of initial
transactions is used to calculate a Block hash for the Genesis Block. For every new Block that
is generated afterwards, the previous Block’s hash is also used as well as its own transactions as input to determine it’s Block hash. This is how a chain of Blocks is formed. Each new Block hash
pointing to the Block hash that came before it. This system of hashing
guarantees that no transactions in the history can be tampered with. Because, if any single part
of the transaction changes so does that hash of the
Block to which it belongs and any following Block’s
hashes as a result. So, it would be fairly easy to catch any tampering as a result. Because, you could just
compare the hashes. This is cool because
everyone on the Blockchain only needs to agree on 256 bits to represent the
potentially infinite state of the Blockchain. The Ethereum Blockchain is
currently 10s of gigabytes. But, the current state of the Blockchain, as of this recording,
is this hexadecimal has representing 256 bits. What about digital signatures? Digital signatures, like real signatures, are a way to prove that somebody
is who they say they are. Except that we use cryptography or math which is more secure than
handwritten signatures that can be easily forged. A digital signature is a way to prove that a message originates
from a specific person and no one else, like a hacker. Digital signatures are used
today all over the internet. Whenever you visit a website over https, you are using SSL which
uses digital signatures to establish trust between
you and the server. This means that when
you visit Facebook.com your browser can check
the digital signature that came with the webpage to verify that it indeed originated from Facebook and not some hacker. In asymmetric encryption systems users generate something
called a key pair, which is a public key and a private key, using some known algorithm. The public key and
private key are associated with each other through some
mathematical relationship. The public key is meant
to be distributed publicly to serve as an address to
receive message from other users, like an IP address or a home address. The private key is meant to be kept secret and is used to digitally sign
messages sent to other users. The signature is included with the message so that the recipient can verify using the senders public key. This way, the recipient can
be sure that only the sender could have sent this message. Generating a key pair is
analogous to creating an account on the Blockchain, but without having to
actually register anywhere. Pretty cool. Also, every transaction that
is executed on the Blockchain is digitally signed by the
sender using their private key. The signature ensures that
only the owner of the account can move money out of the account. To bring it all together,
Blockchain could not exist without hashing and digital signatures. Hashing provides a way for
everyone on the Blockchain to agree on the current world state. While, digital signatures
provide a way to ensure that all transactions are only
made by the rightful owners. We rely on these two properties to ensure that the Blockchain has not
been corrupted or compromised. If you wanna take a deeper dive into hashing and digital signatures, visit Blockgeeks.com and
read some of our articles and guides and our online courses.

13 thoughts on “What is Hashing & Digital Signature in The Blockchain?”

  1. Another superb Blockgeeks.com "Plain English" video teaching session that helps explain complex concepts in a much clearer way. And of course, the text transcript for the video is available too. Thanks for sharing.

  2. sorry mate, but this is totally generic… failed to mention how the key pairs are generated… also the public key is not included in the transaction… it is hashed with the new owners public key.

  3. Mentioned in the vid that the Ethereum blockchain is 10s of gigabytes large. Where is this stored? Do all miners have a copy of it? Wouldn't that put a strain on storage requirements ? Noob question.

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