Blockchain and Cryptocurrency Explained — Part 3– Blockchain (1)

This part on blockchain gets a little technical. So I have broken this down to two smaller pieces.

We understand p2p systems must ensure trust especially when it the whole idea is based on a system of unrelated computers. Let’s look at how the trust is achieved.

If we go back to our p2p example in part 2 , here’s what we said:

In a p2p environment, the bittorrent program checks the file it is downloading.

The question is how does the checking work and trust is established? Well, one of the ways is to do a byte by byte comparison. But that will be slow and unreliable. Instead it stores a hash of the original file and checks it against the file from If the file hash doesn’t match it is rejected.

What is hash?

Hash is another cryptographic technique to hide data from hackers. So it takes any data and then makes it unreadable. While each hash is unique, unlike encryption you can generate hash without any key at all. There are various forms of hashes — MD5, SHA1, SHA256 etc.

All examples below use SHA256 hash [See Appendix for notes on tools]

It differs from encryption in three more ways:

The output is irreversible:

It is one-way street; the output cannot be decrypted at all. Knowing the original message is the only solution because even a small change leads to different hash:

I have progressively capitalized the words in our message.

Output length is fixed:

I have repeated the same message thrice. As you can see the output length is still same.

It works on any data :

The second example is an Ubuntu file. To go back to our torrent trust example, the torrent file will have the above hash stored. A corrupted file’s hash will be different from the expected hash. Hence, the corrupted file will be rejected.

Innovative usage of hash

Email spam has been the bane of electronic communication. Back in the 90s, a cryptographer named Adam Back proposed a brilliant idea to counter spam. The system was called “hashcash”.

Without getting into minute details, the idea was to have the email sender’s computer to take the below information and generate a hash:

  1. email address, date and time etc
  2. random number, also called nonce

This hash had to start with 20 zeros to be valid. Once the valid hash was found it was attached along with the email and sent out.

The email receiver’s computer could use the email content to generate another hash. It would then check the resulting hash against the received hash. If they did not match, email would be marked as spam.

Example of email flow between Red and Green (relaxed condition to 4 zeros only):

The number — 15395 is the nonce part of Red’s message. To generate the valid hash with 4 starting zeros, our sender’s (Red) computer has to check each combination:

Message Hash 1How are you?21:37 7834A5C1A266260A30D310696C0CE20811E44D853F4ECA6EF570AC595B2F6C4A 2How are you?21:37 AB2C56650D330F4A10AFF17F51BE71B0875172EE53A343B1EF620DC17B3821BD

so and so forth unless the correct number (nonce) and hash with required zeros is found.

15395How are you?21:37 -> 00007A092207AD90CC5DC4DDD4865A43DDD4716DA33034ACD66A52F9BE9A162A

How does all this stop spam? Well, on the sender’s computer finding the correct hash takes about a second. While on the receiver’s side verification takes milliseconds. So, for a spammer sending say 10k emails, his computer will hang for 10k seconds or 2.8 hours while each receiver needs to spend millisecond to identify the emails.



  1. Google “SHA256 hash Generator” and you will find a lot of tools to generate hash
  2. Small tutorial and tool to generate SHA256 on a pdf, video, etc here —

Originally published at The Blockchain Blog.

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