What Is SHA-256?

Secure Hash Algorithm 256-bit, also known as SHA-256, is a cryptographic hash function that converts text of any length to an almost-unique alphanumeric string of 256 bits. The output is known as a hash value or hash.


SHA-256 is used for cryptographic security. This hashing algorithm is considered extremely secure as it produces hash values that are irreversible and unique.

SHA-256 was developed by the U.S. Government’s National Security Agency (NSA). SHA-256 belongs to the SHA-2 family of hash functions which have become popular following the NSA’s recommendation to U.S. federal agencies to transition away from its predecessor, SHA-1, after discovering vulnerabilities in the hash function.

The U.S. government and a multitude of widely-used encryption protocols use cryptographic hash functions like SHA-256 to protect sensitive information.

SHA-256 Explained: Key Properties That Define SHA-256 Encryption

The key characteristics that enable SHA-256 to fulfill its purpose are:

  • Uniqueness 

When the SHA-256 hash function is used, distinct inputs will always produce unique hash values. Even a small variation in the input will result in a vastly different hash value. This is known as the ‘avalanche effect’. Furthermore, the hash value will always be 256 bits long, no matter the size of the input.

Here is an example of SHA-256 implementation. The hash value of similar inputs results in vastly differing hash values. While a single-character input produces the same length of the hash value as an eight-character length input.

Input Hash value
m 62c66a7a5dd70c3146618063c344e531e6d4b59e379808443ce962b3abd63c5a
me 2744ccd10c7533bd736ad890f9dd5cab2adb27b07d500b9493f29cdc420cb2e0
meandyou cf7af6b1be152c4f427a3b5beb444e85eeadfb9e062ed420fb9b9a10ccfbadf7
  • Irreversibility 

Hash values created using SHA-256 are computationally infeasible to reverse engineer, meaning you cannot obtain the original input data from the hash value. This ensures that the data remains protected even if the hash value is publicly available, which makes sharing files publicly easy without worrying about a bad actor decrypting them.

  • Deterministic

SHA-256 will always produce the same hash value for a particular input. This property ensures consistency in the hashing process allowing verification of data across remote systems. You can check the deterministic property of the SHA-256 hash function by verifying the input and output of “m”, “me” and “meandyou” mentioned above on various online hash generators like OnlineWebToolKit and Movable Type Scripts.

SHA-256 Use Case Examples

SHA-256 is widely used in various applications to ensure data integrity, security, and authenticity.

Blockchain Technology

SHA-256 forms a critical component of major blockchain protocols like Bitcoin and Bitcoin SV. SHA-256 enables the proof-of-work (PoW) consensus algorithm on the Bitcoin blockchain. The cryptographic hash function is used to verify transactions on the blockchain protocol.

We will talk about the use of SHA-256 in blockchain technology in more detail below.

Digital Signatures

When signing a message with a digital signature, the SHA-256 hash function creates a hash of the message. The content of the message can be verified without revealing it using separate private and public keys created during encryption. This enables easy, secure verification and communication.

Password Protection

SHA-256 is used to convert user passwords into a hash value before storing them in a database. The hash values are matched to the user’s input during login verification. The passwords remain secure even during the event of a data leak, as the SHA-256 hash values require astronomical computing power to crack during a brute force attack.

Furthermore, simple security measures like a limit to the number of password attempts make it impossible.

File Integrity Verification

SHA-256 is used to verify the data integrity of files on the internet during downloads and transfers. When a file is uploaded to a website, a hash value is created associated with the file. When a user downloads that file, the hash value is recalculated to establish its data integrity. If the 2 hashes match, the file is verified.

Digital certificates

SHA-2 family hash functions are extensively used to create and verify SSL and TLS digital certificates. These digital certificates enable an encrypted connection between web servers and web browsers. SSL certificates are required to secure online transactions and to protect customer information.

SHA-256 in Blockchain Technology

PoW blockchains like Bitcoin use the SHA-256 hashing algorithm to keep the blockchain secure against attacks, verify transactions and create new blocks.

SHA-256 hash function enables PoW mining. A block hash is created every time a new block is added to the PoW blockchain. To create the hash of a new block, a miner must add a random string of numbers called the nonce to the information from the previous block and put it through the SHA-256 algorithm.

The only way to do this is to guess and check.

The enormous computational energy required to guess the correct string of numbers to return the right SHA-256 hash values ensures that the blockchain is secure against attacks.

At the time of writing, there were three blockchains in the top 100 most valuable blockchains in the world using the SHA-256 algorithm. Bitcoin was the most valuable blockchain in the world, with a market cap of over $500 billion, as of late-July 2023. Bitcoin Cash stood 19th, and Bitcoin SV stood 59th on the list.

The Bottom Line

The Bitcoin blockchain is considered the most secure blockchain in the world due to its use of the algorithm and its massive network of validators. However, with time and significant technological advancements, SHA-256 hash functions could become vulnerable to attacks.

An improved version of the cryptographic hash algorithm called SHA-3 has been developing since 2012.


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Mensholong Lepcha

Mensholong Lepcha is a financial journalist specializing in cryptocurrencies and global equity markets. He has worked for reputed firms such as Reuters and Fascinated with blockchain technology, NFTs, and the contrarian school of investing, Mensholong has expertise in analyzing tokenomics, price movement, and technical details of Bitcoin, Ethereum, and other blockchain networks. He has also written articles on a wide range of financial topics including commodities, forex, central bank monetary policies, and other economic news.