Cryptographic Hash Function

The cryptographic hash function is an algorithm that is constituted of a repeated sequence of specific actions. This system can be used to transform any form of the data string, which can be of variable lengths into one single fixed format and length. The specific format is known as a hash.

This fixed-format of hash function proves to be a key component in the mining of cryptocurrencies, where proof-of-work is vital. Bitcoin (BTC) uses the SHA-256 hash function.

Now for miners to add a new block in the blockchain and claim rewards, they need to produce a hash value called the target, which needs to be below a certain threshold. Hashes being pseudorandom actually allows checking for a miner's proof of work before they can receive their rewards.