Bitcoin Cryptanalysis: Mechanisms and Reliability of SHA-256 in Ensuring Blockchain Security and How Future Technological Advances Will Affect SHA-256's Resilience to Digital Signature Forgery Attacks

The SHA (Secure Hash Algorithm) family of algorithms are cryptographic functions that transform messages of arbitrary length into hash codes of fixed length, which ensures the integrity and authenticity of the data. Several versions have been released over the years: SHA-0 (the first 160-bit version, 1993), the revised SHA-1 (1995), the more advanced and secure SHA-2, including the widely used SHA-256, and the latest SHA-3, developed in 2012 based on the Keccak algorithm 5 .

SHA-256, part of the SHA-2 standard, uses 32-bit words and always produces a 256-bit hash, ensuring the same result size regardless of the size of the input data 5 7 .

Architecture and structure of the SHA-256 algorithm

SHA-256 is based on the Merkle-Damgard structure, a method for converting a variable-length input message into a fixed-size output using sequential block processing[article source]. The message is broken into 512-bit blocks in big-endian format. If the message length is not a multiple of 512 bits, the last block is padded in a special way: a ‘1’ bit, a lot of zeros, and a 64-bit representation of the original message length. This eliminates collisions in which the last blocks of different messages could coincide[article source].

The hashing initialization starts with an initialization vector (IV) consisting of eight 32-bit constants calculated based on the fractional part of the square roots of the first eight prime numbers – this ensures a high level of nonlinearity and diffusion, and reduces the predictability of the result [original article].

Using SHA-256 in Bitcoin Security Mechanisms

In the Bitcoin network, SHA-256 is the cornerstone of security, trust, and decentralization. Its use enables the Proof-of-Work mechanism, where miners select a nonce to ensure that the block header hash matches a given difficulty level. This limits the possibility of counterfeiting and ensures the consistency of the network consensus 1 9 .

If even one bit value in a block of transactions changes, the resulting hash becomes invalid, which automatically breaks the further chain of blocks and makes attempts to change the information ineffective 1 .

SHA-256 Security and Resilience

SHA-256-based encryption provides security through the following features:

One-sidedness: restoring the original data from the hash is almost impossible.
High sensitivity to changes in input data – the slightest change causes radical transformations of the hash.
Robust resistance to computational attacks, including collisions.

Modern research notes that quantum computing could theoretically impact the security of the algorithm in the future, but at the moment such threats remain hypothetical and have not been realized 3 .

Features of practical construction of blocks for hashing

SHA-256 data blocks are represented as an array of 64 32-bit words (initially 16 words of fixed size, expandable later). This structure allows for reliable and efficient processing of successive parts of a message, providing one-way transformation and resistance to attacks [original article].

Conclusion

SHA-256 is a fundamental cryptographic algorithm that, due to its reliability and efficiency, has become a basic element in the architecture of blockchain networks, especially Bitcoin. Its features – a fixed hash length, strong cryptographic resistance, the use of the Merkle-Damgard structure – make it an ideal tool for creating secure digital chains that exclude falsification and ensure data integrity. Despite the challenges of future technologies such as quantum computing, SHA-256 remains an indispensable standard in cryptography and cryptoeconomics today 1 3 5 .

The Merkle-Damgård structure provides security for the hashing in SHA-256 through an iterative and block-based approach, in which an input message of arbitrary length is broken into fixed blocks, each of which is sequentially processed by a 1 2 5 compression function .

Key features that enhance cryptographic strength include:

Iterative application of the compression function: each message block is processed together with the output (intermediate hash) of the previous block. This prevents the possibility of replacing individual parts of the message without changing the final hash 1 5 .
Using an initialization vector (IV): An initial fixed value specific to the algorithm protects the first block and sets the initial conditions for subsequent computations.
Message padding: The last block is padded with a “1” bit, the required number of zeros, and a 64-bit record of the original message length, which prevents extension attacks and ensures the uniqueness of the data representation 1 5 8 .
Hardening the structure: if necessary, the result of the last iteration is additionally subjected to a finalization function, which enhances the bit mixing and avalanche effect, ensuring that the hash is highly sensitive to the slightest change in the input data 1 5 6 .

It has been separately proven that if the compression function is collision-resistant (i.e. it is impossible to find two different blocks with the same output), then the entire Merkle-Damgård hash function inherits this resistance. This is the fundamental principle that underlies the SHA-256 protection against collisions and forgeries 1 5 .

Thus, the Merkle-Damgård structure in SHA-256 provides a strong security mechanism by sequentially, interdependently processing message blocks and using cryptographically strong compression functions, which makes computing the inverse or finding a collision extremely labor-intensive and practically impossible.

The choice of initial constants in SHA-256 plays a critical role in ensuring the cryptographic strength of the algorithm, since they set the fundamental initial state for the entire hash chain. These constants—eight 32-bit values derived from the first 32 bits of the fractional parts of the square roots of the first eight primes—are chosen to ensure a high degree of diffusion and nonlinearity in the hashing process 1 .

This method of choosing constants guarantees several important properties:

They appear pseudo-random and cannot be predicted or manipulated, which eliminates the possibility of creating intentional collisions during the initialization stage.
The initial values help to spread the influence of each bit of the input message evenly across the resulting hash (avalanche effect), increasing resistance to pattern-finding attacks.
They prevent weaknesses in the algorithm due to the initial state, especially when the compression function works in the Merkle-Damgard structure, where the result of the previous step is mixed with the subsequent block.

Thus, the initial constants serve as a kind of “cryptographic foundation” that helps to avoid predictability and vulnerabilities, strengthening the integrity and reliability of SHA-256 in protecting data, including critical operations in systems such as the Bitcoin blockchain 1 5 .

The features of Bitcoin data blocks that can create collision vulnerabilities are related to the structure of the blocks themselves and the process of their formation:

Block format and padding: Each block of data in SHA-256 is a fixed size of 512 bits and is treated as an array of words. If the message length is not a multiple of the block size, the last block is padded with a 1 bit and zeros, as well as a 64-bit representation of the original message length. If this padding is not managed correctly, it is theoretically possible for different messages to result in identical blocks (collisions) if padding is not used correctly [source from previous answers].
Block structure in the blockchain: each block contains the hash of the previous block, the hash of its own transactions, and metadata (including the order in the chain). The possibility of branching the chain of blocks, when the same previous ones can be linked to different subsequent blocks (for example, when several miners work simultaneously), entails the probability of temporary collisions on the hash 2 6 .
Collision attacks: Classical and chosen-prefix hash collision attacks theoretically allow attackers to find different blocks with identical hash values, compromising the trust in hash functions 1 . In Bitcoin, this could be a hypothetical problem if effective methods are found to bypass SHA-256.
Double-spend and 51% attack issues: In case of controlling more than 50% of the computing power, an attacker can create parallel chains of blocks with the same bitcoins, which is technically related to the possibility of conflicts and collisions in the transaction record 2 4 6 .
Potential software vulnerabilities: Individual bugs, such as in cryptographic libraries or the implementation of Bitcoin’s elliptic curve cryptography functions (e.g. insufficient validation of points on the ECC curve), may indirectly facilitate transaction and block forgery attacks 3 5 .

Thus, the vulnerability of blocks to collisions in Bitcoin is due to the complexity of managing block structures and additions, the possibility of branching, and the current limitations of the computational security of cryptographic functions. However, the high resistance of SHA-256 and the distributed nature of the network make the practical implementation of such collisions extremely difficult and unlikely.

Miners use the SHA-256 algorithm in the process of mining new blocks and confirming transactions in the Bitcoin blockchain through the Proof-of-Work mechanism. The principle of operation is as follows:

The formation of a block header includes data about the previous block, a list of transactions and a random number – “nonce”.
Miners repeatedly change the nonce value and calculate the SHA-256 hash from the block header. Their task is to find a hash that will satisfy a given network difficulty condition – that is, have a certain number of leading zeros or be less than a given target value.
This process involves trying a large number of options using powerful computing devices, which requires significant resources – which is why mining is called “proof-of-work”.
Once a suitable hash is found that meets the difficulty conditions, the block is considered solved and added to the blockchain. At the same time, a confirmation of the new block is sent to the network, and the transactions in it are considered confirmed and irreversible.
By including the hash of the previous block in the header, the entire chain becomes linked and tamper-proof: any change in the transactions will result in a change in the hash, which will be detected by the network as a consensus violation.

Thus, SHA-256 ensures the generation of a unique, fixed-length digital fingerprint of a block that miners try to match according to the network’s criteria, ensuring the reliability, immutability and decentralization of data in the Bitcoin blockchain 1 2 3 5 7 .

The main potential threat to the security of the SHA-256 algorithm in the future is considered to be the capabilities of quantum computing , which could significantly change the landscape of cryptography. Quantum computers are capable of searching and processing data much faster than classical machines, which theoretically allows for a reduction in the time it takes to find collisions or restore original data. In particular:

Grover’s quantum algorithm can speed up the brute force hash search, weakening the strength of SHA-256, although with modern assumptions about key sizes and hash lengths, the attack is still very resource intensive 1 2 3 7 .
Shor’s algorithm directly threatens the cryptographic schemes associated with Bitcoin signatures and keys, but does not affect SHA-256 itself, but rather digital signature systems, which indirectly affects the security of the ecosystem 7 .

Besides quantum computing, there are other areas of potential threats:

Bugs in the implementation of SHA-256 , including software bugs or memory leak vulnerabilities, that could lead to the compromise of cryptographic protection 1 5 .
As time passes and technology advances, it may become necessary to use longer hashes (as in SHA-3) to maintain a high level of security with increased computing power 2 4 .
The need to support and migrate to algorithms that are resistant to quantum attacks, known as post-quantum cryptography, is being actively studied and developed 7 10 .

SHA-256 remains a robust and widely used standard today, but researching and preparing for new forms of threats is an ongoing challenge in the fields of cybersecurity and cryptography.

Future technological advances, especially the development of quantum computing, could significantly impact the resistance of the SHA-256 algorithm to attacks. At present, SHA-256 remains resistant even to potential quantum threats, but scientists are actively researching and developing new quantum-resistant cryptographic methods to prepare for the coming changes 1 2 .

Quantum computers employ specific algorithms, such as Grover’s algorithm, which theoretically speed up collision detection and allow for more efficient attacks on hash functions. However, the cost and resources required to implement such attacks on SHA-256 remain extremely high, making such attacks virtually impossible for now 1 .

Furthermore, advances in the computing power of classical computers may gradually reduce the time required for brute-force attacks, but the huge size of the SHA-256 space (2²⁵⁶ possible variants) makes such attacks unprofitable for the foreseeable future 1 5 .

It is also worth noting that in order to improve security and prepare for future challenges, there is already a SHA-3 algorithm with a different structure, which is considered as a backup option in case vulnerabilities are discovered in SHA-2. A gradual transition to such algorithms can be a response to the challenges of future technologies and strengthen cryptographic protection 1 .

Ultimately, despite potential threats and the evolution of computing technologies, SHA-256 currently remains reliable and resistant to most known types of attacks, but the development of quantum computing and new approaches to cryptanalysis are pushing for the development and implementation of more modern and robust standards.

With the development of quantum computers on SHA-256, new types of attacks may appear based on the capabilities of quantum algorithms, in particular:

Grover’s attack is a quantum algorithm that speeds up the brute-force attack on possible inputs (e.g., when searching for collisions or finding a prefix for a hash) by about the square root of the classical complexity. For SHA-256, this means that the algorithm’s resistance to brute-force attacks decreases from 2²⁵⁶ to about 2¹²⁸ operations, which is still quite hard, but requires larger keys or hashes in the future 3 7 9 .
Faster collision detection – Although collisions in SHA-256 are virtually impossible today, quantum computing could theoretically make them easier to find, which calls into question the integrity and uniqueness of digital signatures and transactions in SHA-256-based cryptosystems 2 3 .
Compromise of digital signatures – Quantum algorithms, especially Shor’s algorithm, threaten asymmetric cryptography (e.g. RSA and ECC), which is closely related to the use of SHA-256 hash functions in digital signatures. This indirectly compromises the security of the entire protocol used in Bitcoin 1 3 5 .
Hybrid and combined attacks – Cybercriminals in the future may use quantum and classical methods in combination to maximize the speed of cryptanalysis, especially in complex multi-component cryptosystems.

However, at the present stage, quantum computers with the number of qubits necessary to effectively crack SHA-256 have not yet been implemented; experts predict that such capacities will not appear before 2030–2035 1 4 8 . In preparation for these risks, post-quantum cryptographic standards capable of resisting quantum attacks are already being developed and implemented, including enhanced hash functions and new signature schemes 5 6 .

Thus, the key potential new attack methods against SHA-256 are quantum-accelerated brute-force and collision searches (based on Grover’s algorithm), as well as indirect threats through the vulnerability of SHA-256-related digital signatures to Shor’s algorithm.

Bitcoin Cryptanalysis: Mechanisms and Reliability of SHA-256 in Ensuring Blockchain Security and How Future Technological Advances Will Affect SHA-256’s Resilience to Digital Signature Forgery Attacks

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