Cryptography or cryptology is research on techniques for securing communication in the presence of adversaries. In the old days, cryptography was synonymous with encryption. Modern cryptography relies heavily on mathematical theory and computer science. It also utilizes works from other disciplines such as electrical engineering, communications science, and physics.

Cryptographic algorithms are designed around the assumption that with foreseeable computational hardware advances, it will not be feasible for any adversary to decipher encrypted messages based on these algorithms. In other words, in theory, it is possible to decode the encrypted message, but it is infeasible to do so practically. These algorithms are therefore defined to be computationally secure. Theoretical research (for instance, parallel or integer factorization algorithms) and computational technology advancements (for instance, quantum computers) can make these algorithms practically insecure and, therefore, encryption algorithms need to be adapted continuously.

Encryption is the process of converting plaintext into unintelligible text, called ciphertext. Decryption is the reverse, in other words moving from the unintelligible ciphertext back to plaintext.

The encryption algorithms used by Bitcoin mining are hash functions. A hash function is a function that maps data of any size to data of a fixed size. The values returned by a hash function are called hash values or simply hashes. A cryptographic hash function allows one to verify easily  that some input data maps to a given hash value. However, the reverse – when the input data is unknown—it is practically infeasible to reconstruct the input plaintext from a hash value. In other words, hashing is a one-way operation. Another notable attribute of a hashing function is that a minor change in the input plaintext will result in a completely different hash value. This feature is desirable for safeguarding information as any tiny change to the original data by a hacker results in a visibly different hash.

Two common hash algorithms are MD5 (message-digest algorithm 5) and SHA-1 (secure hash algorithm):

• Developed by Ronald Rivest in 1991, MD5 maps input plaintext into a 128-bit resulting hash value. MD5 Message-Digest checksums are commonly used to validate data integrity when digital files are transferred or stored. MD5 has been found to suffer from extensive vulnerabilities.
• SHA-1 is a cryptographic hash function mapping input plaintext into a 160-bit (20-byte) hash known as a message digest – often displayed as a hexadecimal number, 40 digits long. SHA-1 was designed by the United States national security agency and is a US federal information processing standard.

SHA-256 is a successor hash function to SHA-1. It is one of the strongest hash functions available and has not yet been compromised in any way. SHA-256 generates an almost unique 256-bit (32-byte) signature for a text. For example, My test string maps to 5358c37942b0126084bb16f7d602788d00416e01bc3fd0132f4458d
d355d8e76. With a small change, the hash of My test strings is 98ff9f0555435
f792339d6b7bf5fbcca82f1a83fde2bb76f6aa95d66050887cc, a completely different value. SHA-256 produces 2^256 possible hashes. There is yet to be a case where two different inputs have produced the same SHA-256 hash, an issue called collision in cryptography. Even with the fastest supercomputer, it will take longer than the age of our universe to hit a collision. As a result, SHA-256 is used by Bitcoin for encryption.