To assure proper functioning of the blockchain network alongside transaction processing and distributing rewards to miners, cryptocurrency uses specific algorithms. These algorithms are decrypted through the use of mining equipment. Furthermore, crypto represents an encrypted data string denoting a unit of currency and is organized and monitored by the P2P network we know as the blockchain. There are numerous different algorithms underlying the functions of different cryptocurrencies. These are the top 5 cryptocurrency algorithms used by some of the biggest cryptocurrencies on the market.

SHA – 256

SHA-256 belongs to the group of SHA-2 algorithms and it stands for “Secure Hash Algorithm”. The algorithm generates a 32-byte (256-bit) signature with a unique text string. The time for processing blocks for the SHA-256 algorithm requires hash rates with Giga hashes per second, taking anywhere between six to ten minutes. In the case of Bitcoin, the first currency to use SHA-256, the processing time for block generation is set at 10 minutes.

The SHA-256 algorithm enables ASICs (Application-Specific Integrated Circuit) to join the network of miners, increasing the level of competitiveness among miners. The SHA-256 algorithm allows miners to compare the computed hash, which represents the output, to the expected hash value, which is how the integrity of data is determined and the functionality of the network preserved. Some of the most famous cryptocurrencies using this mining algorithm are:

ETHASH

Ethash is a Proof-of-Work algorithm created for the Ethereum blockchain. When it was first created by the Ethereum dev team, the algorithm was referred to as Dagger-Hashimoto, combining two different algorithms. Vitalik Buterin, one of the creators of Ethereum and ETH, developed Dagger and Thaddeus Dryja created the Hashimoto algorithm.

The Dagger algorithm made by Buterin was supposed to represent an alternative to an algorithm with memory hard functions, such as Scrypt, for instance. Buterin noted that algorithms such as Scrypt are very difficult to verify in cases where the level of memory-hardness would be increased to safe levels. Since the algorithm was put to a test, Sergio Lerner proved that the Dagger algorithm was vulnerable to shared memory hardware acceleration. That is how Dagger was dropped as an option for Ethereum’s mining algorithm and the team restarted the research.

Thaddeus Dryja created Hashimoto as an algorithm that would provide resistance against ASIC miners to democratize mining and create a less competitive environment for the mining community. Hashimoto intends to achieve resistance to ASIC miners by representing an IO-bound algorithm. In other words, the limiting factor in the process of mining is read by making a memory. The Dagger and Hashimoto algorithms were merged to create the final form of Ethereum’s algorithm, Ethash. The algorithm also uses Keccak and is standardized as the SHA-3 type algorithm. Ethash supports the process of mining for the Ethereum network, providing resistance against ASIC miners and providing a fast solution where the network is provided with a maximum of 15 seconds for block time. Ethash uses mega hash per second to measure the hash rates. The algorithm is GPU-memory intensive, which means that Ethash-based mining is best performed with the use of a Graphics Processing Unit. Some of the most famous cryptocurrencies using Ethash as their mining algorithm are:

SCRYPT

The Scrypt algorithm is a password-based key derivation function and was created by Colin Percival, originally for use by the Tarsnap online backup. Scrypt is used by many different cryptocurrencies as a Proof-of-Work algorithm. Since Scrypt demands large amounts of memory, the algorithm was designed to perform large-scale custom hardware attacks. Scrypt is measured by Kilo hashes per second and is proven to be faster and more efficient in the sense of validating transactions and generating new blocks.

The algorithm was first used in 2011 when it was first implemented for Tenebrix. The adoption of the Scrypt algorithm, however, was encouraged as it was used as the basis of Litecoin and Dogecoin. Scrypt only enables some types of ASIC miners, specially designed for Scrypt-based mining, while also enabling mining by CPU and GPU (Graphics Processing Unit). The algorithm is used as the basis for various digital coins. Some of the most famous cryptocurrencies using Scrypt for mining are:

EQUIHASH

Equihash was first developed by Dmitry Khovratovich and Alex Biryukov and introduced by the University of Luxembourg as part of its research. Equihash represents a Proof-of-Work algorithm and supports the process of mining various cryptocurrencies. The algorithm was designed in 2016 and was created to tackle the problem of colliding hash values. Equihash also facilitates ASIC resistance, while the function is based on the assumption that ASIC hardware already has high memory bandwidth.

Equihash uses three different parameters to determine the time and memory requirements for the algorithm. What is interesting about Equihash is the fact that the algorithm allows mining with standard computers, which means that the algorithm is not power-intensive, lowering the bar for competitiveness among miners. The S seed used by the Equihash algorithm is unique for every equation, while also making sure that solutions are incompatible. Some of the most famous cryptocurrencies using Equihash as a mining algorithm are:

CRYPTONIGHT

CryptoNight is a memory-bound Proof-of-Work algorithm and relies on random access to a slow memory by emphasizing latency dependence. The main difference between CryptoNight and Scrypt is the dependence each previous block’s dependence on new blocks. CryptoNight was created to be suitable for regular personal computers to enable mining with CPUs by bringing equality to Proof-of-Work pricing functions.

The length of each block is set to 64 bytes while the calculation speed is calculated exponentially concerning facilitating memory-saver functions. The algorithm proposes a megabyte of internal memory, which is almost unacceptable for the specifications of ASIC miners. CryptoNight was created with the cooperation of Bytecoin developers and the CryptoNote team to enable CPU and GPU-based mining of cryptocurrency while restricting access for ASIC miners. The hash rate of the algorithm is measured by hashes per second.

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Author: Tokens.net Team
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