- The hash rate is the number of guesses made to add a block to the Blockchain.
- A greater hash rate denotes greater security in Blockchain.
Understanding Hash Rate?
Hash Rate is a very important cryptographic term that plays a major role in the working of the cryptocurrency. The reason it is very important to understand this term is because knowing the hash rate. One can easily anticipate how secure the cryptocurrency is. The mining difficulty can also be measured by knowing the hash rate. Till now, you must have understood the importance of understanding hash rate. So now let’s just dive into this concept until we understand every single detail about it.
What is Hash Rate?
In very simple terms, hash rate is the number of guesses per second generated by using computational power on a blockchain network to guess the right hash and add the block to the Blockchain. This might seem like a very complex definition, but believe me; this is the simplest. The reason it might seem complex to you is that you might not be aware of the background of this definition. For example, what is a hash? Let’s start by understanding hash in the first place.
What is Hash?
Basically, hashing is taking input of any length and returning output of a fixed length. In Blockchain, the input is the transaction data. For example, John sends 10 Bitcoins to Simon. This is the raw transaction data. Hashing is now converting this raw transaction data into a 64-digit alphanumeric code. This code is always of a fixed size, which is 64 characters.
The algorithm that Bitcoin uses for hashing is called SHA 256, Where SHA stands for Secure Hashing Algorithm and 256 stands for the 256-bit size of this algorithm. The reason for using the algorithm is to secure the network.
A hash is always the same size. Hashing is the process of guessing the alphanumeric code. Once the miner guesses that code, a new block containing all the details of the transactions is added to the Blockchain.
Importance of Hash Rate for Blockchain
A larger hash rate proves the trustworthiness of the blockchain. The reason is that if any single entity has the capacity to hash 50% of the Blockchain, they gain the power to control the transaction, which is a very big vulnerability for the Blockchain. So a larger hash rate is very important for a blockchain to function properly.
The Measure of Hash Rate
The hash rate is the number of hashes or guesses per second. So the more computational power used to create these guesses, the higher the hash rate. Therefore, every Blockchain has a different unit for measuring the hashes. For example, bitcoin is the biggest Blockchain, and hence it measures its hashes in terra hashes because hashes happen in trillions on this blockchain.
Smaller blockchains that have a lower hash rate use terms such as Giga hashes (1 billion/s) or Kilohashes per second (1,000/s).
Are Price and Hash Rate Interdependent?
There is no direct connection between the price of the Blockchain and its hash rate. But the popularity of a blockchain plays a major role in deciding its price. And a higher hash rate is also an indicator of the popularity of the Blockchain. For example, the hash rate of bitcoin is the maximum, and it is very popular too. A higher hash rate indicates more security on the blockchain.
Conclusion
The hash rate is a crucial factor in determining the security and trustworthiness of a blockchain. A higher hash rate signifies greater security and popularity, but its direct correlation with the blockchain’s price is not evident. Understanding and monitoring hash rates are essential for ensuring the integrity of cryptocurrency networks.
