Every Bitcoin transaction on the blockchain platform has a unique alphanumeric address stored on the ledger that acts as a record or proof that the transaction was completed. In order to enhance the security and privacy of the data, the ledger uses complex mathematical hash functions, where every transaction has its own transaction hash.
The hashing method plays a crucial role in cryptographic operations. In cryptography, information and communication are protected by the use of codes that can only be deciphered by the people to whom the information is addressed. When any kind of data or plaintext (human-readable communication) is transformed by a sequence of mathematical operations or algorithms into a string of characters, i.e. ciphertext, we refer to this cryptographic method as hashing.
To further comprehend the function of a transaction hash, let us first examine the underlying technology that supports this distinct and vital component of the cryptocurrency transaction process.
How Blockchain Technology Works
Blockchain technology is the primary digital mechanism for storing and administering cryptocurrencies. On blockchains, transaction information is encrypted into blocks (thus the name). Excluding the first block of the chain, all succeeding transaction blocks are connected to the one before them and follow a chronological order.
Merkle Root (Transaction Root Value)
Before being delivered to the receiver, all information relating to Bitcoin transactions is encrypted in a hash. These hashes of the transactions included inside a block can be further hashed a few more times. This highly complex procedure, which might take many hours to complete, represents the Merkle root, i.e.the root value of a transaction.
Since the Merkel Root is a sum of all hashes contained in a block, it appears in the block header of the transaction. In this way, the network-approved transaction may be securely confirmed by transferring just a small block of headers rather than the whole blockchain to the user’s computer.
Understanding Hashing Algorithms
In blockchain technology, the hashing process transforms a variable-length chain of encrypted data in letters and integers into a shortcode, known as a hash. From any length of data record, cryptographic hash algorithms create a chain of characters with a predetermined length. A data record might consist of a single word, a phrase, a lengthier text, or an entire file.
Essentially, hashing algorithms follow inflexible mathematical principles that cannot be altered. Their principal purpose is to compress the received transaction information in a homogenous chain with a pre-programmed length.. First, the operator picks out the most convenient type of hashing algorithm and programs it into a node. After this step, the operator inputs the encrypted data into the node’s program and the hashing operation commences.
What Is a Transaction Hash in a Blockchain Transaction?
As a result of the division procedure, the coded message is divided into transaction data blocks that are the same in size and are compressed. After the hashing procedure is completed, the hashed transaction information is stored as a sort of a sum of all transactions that serves as a unique identifier of a given transaction on the blockchain platform. Ultimately, the encrypted transaction data in the form of a transaction hash may be transmitted to the designated recipient.
Every transaction on the blockchain is of an open nature. A transaction’s identification number allows for easy tracking and tracing of its status, as well as viewing transaction information such as the sender’s and receiver’s addresses, the amount of cryptocurrency included in the transaction, the block height, timestamp, transaction history, transaction fees, and the number of confirmations. Due to the fact that the transaction hash contains no personal information (the traders’ addresses are coded), its distribution is completely secure.
Transaction Hash ID (TxID)
Whether a cryptocurrency trader pays with Bitcoin, Ethereum, or another altcoin, the shop, third-party wallet service, or cryptocurrency exchange platform is likely to request the hash or transaction ID as proof of payment.
The transaction hash, also known as a transaction ID (TxID), is a string of randomly aligned alphanumeric characters that act as the Bitcoin transaction’s fingerprint. As a unique property, this cryptographic method is used to identify almost every transaction on the Bitcoin network. Transactions that take place on other cryptocurrency blockchains such as Ethereum or Litecoin have their own TxIDs as well.
What is the Function of the Nonce in a Transaction Hash?
It is standard practice to include the nonce in the authentication protocol to ensure that the data hasn’t been used previously in fraudulent digital network replay attacks.
A nonce is a cryptography abbreviation that stands for “number only used once”. It’s commonly utilized as a token in digital trading operations. When this random integer is encoded in a transaction hash on the blockchain, it is solved by blockchain miners in exchange for crypto assets.
These random integers, which are utilized in the HTTP digest access authentication mechanism, are utilized only once to generate hashes of the private key phrase. They also enable password verification when you access internet websites that require passwords.
Additionally, many of the nonce numbers contain timestamps, which adds an additional layer of security to the encrypted data.
Where to Look for Your Transaction Hash ID
Locating your transaction hash on a blockchain explorer is quite easy. All you need to do is simply click the transaction hash to discover it on the blockchain explorer.
Additionally, whether viewing your transaction on a block explorer website or copying the URL from the same page, the transaction ID frequently appears at the top of the page. For instance, when you withdraw your cryptocurrency assets from a centralized exchange (CEX) such as Binance, the exchange platform will display the transaction ID (TxID) associated with your withdrawal transaction and the transaction details.
Listed below are various block explorers for different crypto assets to get you started:
- BTC: https://www.blockchain.com/
- LTC: https://live.blockcypher.com/
- ERC20: https://etherscan.io/
- EOS: https://www.eosx.io/
- XLM: https://stellar.expert/explorer/public/
- BCH: https://bch.btc.com/
- ETH: https://etherscan.io/
A Few Words Before You Go…
The hashing algorithm’s cryptographic function, which is employed in the coding of cryptocurrencies, guarantees that transactions are both fast and safe. In addition to secure password storage, digital signatures, data authentication, and file and document management, hashing algorithms are employed in a variety of additional applications.
By providing the transaction hash of a particular transaction, an exchange platform’s support team representative will be able to find it and check its status in case the user needs more details on the latest transaction status.