Definition ∞ A hash function is a mathematical algorithm that converts an input of any size into a fixed-size string of characters, known as a hash value or digest. In cryptocurrency, these functions are critical for data integrity, creating unique identifiers for blocks and transactions, and enabling proof-of-work mechanisms. Small changes to the input produce significantly different hash outputs. This cryptographic tool is fundamental for data compression and verification.
Context ∞ Hash functions are foundational to blockchain security, used in block headers, transaction IDs, and cryptographic proofs. The ongoing development of more secure and efficient hash algorithms is a constant area of research, particularly in response to advancements in computing power. Concerns about collision resistance remain paramount for protocol integrity and ledger security.
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