Have hashing stg to do with your wallet security?

Oh, yes.

If you have been in crypto for more than 10 days, you’ve been hearing about hashing. You can think it’s technical (it is) complicated (not that much) and nerdy (you are a little as well). But it’s not a developer thing only. Of course you can open a Binance account without understanding, but are you sure it isn’t worth it?

As I wrote here, I am enrolled in FREE a 4-courses-specialization from Duke University, titled “Decentralized Finance (DeFi): The Future of Finance”, held by Professor Cam Harvey: the 2nd one, DeFi Primitives, deals with mechanics, supply and ownership, and loans and swaps. And hashing.

Understanding hashing is a core element of crypto, and it is connected with why your custodial wallet it’s safer than your not custodial or bank account one.

When it comes to cryptocurrency, your wallet public key is like your digital signature. It’s a unique code that identifies your wallet and allows you to receive transactions. But have you ever wondered how this key is generated? The answer lies in the power of hashing.

Hashing is a mathematical process that takes an input (or “message”), and returns a fixed-size string of characters, known as a “hash.” In the case of cryptocurrency, the input is typically a private key, and the output is the corresponding public key.

It’s definitely different from encrypting, while encryption function is to lock and unlock something, and not to verify the owner, author, sender of a message.

In the Ethereum blockchain, the hashing algorithm used is called Keccak-256. When a user generates a new wallet, a private key is randomly generated and then run through the Keccak-256 algorithm to produce the corresponding public key. This public key is then used as the user’s wallet address, allowing others to send transactions to that wallet.

Here’s how generated, in detail:

Bitcoin uses a similar process, but with a different hashing algorithm called SHA-256. The private key is run through the SHA-256 algorithm to produce the corresponding public key, which is then used as the wallet address.

The process, however, is longer and a little wired and takes 11 steps you can find in related lecture on week 4 lectures.

It’s important to note that the process of hashing is one-way, meaning that it is practically impossible to determine the original private key just by looking at the public key.

Make it simple, if it is inevitable to say that 3+4=7, you cannot go back to 3+4 simply starting from 7.

This adds an extra layer of security to the cryptocurrency ecosystem, as it ensures that only the owner of the private key can access the corresponding funds.

In summary, the process of hashing plays a crucial role in determining wallet public keys for Ethereum and Bitcoin. By taking a private key and running it through a specific hashing algorithm, a unique and secure public key is generated, allowing users to safely and easily send and receive transactions.

If you want to play, on github you find free tool to hash with Keccac-256 as well as SHA-256.

DYOR.

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