Digital information is a sequence of numbers. An information block can be very large, and a universal method is needed to quickly identify it. This is where a hash is used - it can be compared to a fingerprint. Just as a fingerprint can accurately identify the person who left it, a hash corresponds to only one block of information. If even a small change occurs in this block, the hash will no longer match.

This property is precisely what is used in blockchain, and storing data in the form of a hash is the key to the entire blockchain technology. A hash, in relation to cryptocurrency, is a string of characters that contains and protects information. The hash function allows the application of a mathematical algorithm to create a new hash - data about transactions conducted by users is transformed into it.

It can be applied to data of any size, after which the resulting hash will be of a fixed size - significantly smaller than the original data. Thus, with its help, this data becomes easy to both store and transmit. The hash function is one-way - meaning it's impossible to restore the original data based on the hash, which ensures the protection of transactions.

Mining is the use of the hash function to transform data and create a hash. To achieve the target hash, many attempts are usually necessary, which is why high computational power is required. However, more and more options are emerging that do not require high power consumption for mining, consuming a lot of electricity.