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# Most Used Cryptocurrency Algorithms

Understanding the concept and mathematics of cryptocurrency algorithms is not crucial for owning, buying, or trading coins. However, it is very useful for miners, or for those who want to become miners and earn some coins using the power of their hardware. In this article, we’re going to look at the most commonly used algorithms in the cryptocurrency world, what coins are based on each of them, and how you can use algorithms knowledge to your advantage.

The first notion you need to understand is that of ‘hash,’ which is a string of characters generated by a mathematical function. The hash is an encrypted form of the information about each cryptocurrency transaction. The mathematical function used to generate it is often referred to as a ‘hashing algorithm,’ which is what miners try to solve when mining cryptocurrencies. Each of these functions is different from the next one, but they all function according to one principle – which is the algorithm.

Maths aside, all you need to know is that there are several algorithms used in the cryptocurrency niche. Each of them generates different mathematical functions that can only be solved using powerful computers – be that ASIC processors, CPUs, or GPUs, and mining software. The algorithm dictates the type of hardware you need to use in order to mine the coins based on it, as well as how much hashing power is required for mining. Let’s take a look at the most common cryptocurrency algorithms:

### 1. SHA-256

The SHA stands for ‘Secure Hash Algorithm,’ and the 265 refers to the length of the hash output in bits. SHA-265 generates 32-bit signatures, that can be mined using ASIC processors. In the past, it was also possible to mine SHA-256 using CPUs and GPUs, but ASICs are specifically built for mining, and thus more productive, especially since the hash rates required by SHA-256 are in the GH/s (or billions of computations per second.) Needless to say, the apparition of ASIC processors on the market has turned some people away from Bitcoin mining, as the process became centralized and controlled by the companies producing the miners.

The most popular application that uses SHA-265 is Bitcoin, but there are a number of other cryptocurrencies that are based on it as well, including BitcoinCash, Namecoin, Peercoin, and more.

### 2. Scrypt

Scrypt is a quicker and more simple algorithm than SHA-256, but it relies heavily on big amounts of RAM memory. Grace to this, it doesn’t require specific ASIC processors to mine it, and it can be mined with regular CPUs and GPUs. It is said that we could see Scrypt ASICs on the market in the future, but probably not in the next couple of years. Scrypt algorithm mining requires hashing power in the KH/s or a thousand computations per second. Judging by the numbers alone, you can see that Scrypt is not nearly as hard to mine as SHA-265, hence its popularity with beginner miners. However, it has a downside – it’s not very energy savvy, so what it saves up on hardware, it will consume in electrical energy.

Popular cryptocurrencies based on the Scrypt algorithm include Litecoin and Dogecoin, but also less famous altcoins such as Worldcoin, Goldcoin, and Novacoin.

### 3. Ethash

Ethash is the algorithm used for Ethereum-based tokens and currencies. It was designed in a way that makes it ASIC-resistant, which means we won’t be seeing any Ethereum ASIC miners anytime soon (mostly because it relies on big amounts of RAM memory.) Instead, it can be mined using regular CPU and GPU rigs and requires hash rates in the MH/s (millions of computations per second.) That means that you’ll still have to get a pretty powerful GPU if you want to start mining Ethash-based coins. Ether (ETH), Ethereum Classic (ETC), and Expanse (EXP) are all Ethash based currencies.

It’s worth noting that the Ethash algorithm is looking to switch from a PoW (proof of work) system to a PoS (proof of stake) one. This means that the miner’s reward will not depend on how much work he has done, but rather how much Ether he stakes in a voting-like system.

### 4. X11

X11 is a hybrid algorithm based on as many as 11 other different algorithms. It was developed by the same person who is behind Dash, one of the most promising cryptocurrencies right now. Because it is based on 11 different algorithms, X11 is also ASIC resistant, meaning you cannot build a specialized computer for mining it. X11 was born as a response to the likes of SHA-265, which have become centralized as a consequence of not being ASIC resistant. Another advantage of X11 is that it doesn’t require a lot of energy to mine, and it’s known to keep your computer about 30% cooler than other mining algorithms. Dash and other coins based on this algorithm (Karmacoin, Startcoin, XCurrency) can be mined using regular CPUs and GPUs. X11 mining calls for a hash rate in the MH/s (million computations per second.)

### 5. Equihash

Equihash is another algorithm that aims to keep cryptocurrency mining a decentralized process. Much like X11, its nature makes it almost impossible to create ASIC processors that could mine it. The algorithm is based on something called the generalized birthday problem. This implies that in a group of 367 people, there’s a 100% probability that at least two will share a birthday, but already in a group of 70 people, there’s 99.9% probability of that happening. In other words, the algorithm does not aim to achieve 100% verification for the block, but just enough for it to be considered valid.

The most popular currency based on Equihash is ZCash, which offers users extra privacy in their transactions. However, you can also mine coins like Bitcoin Gold using Equihash hardware, aka GPUs and CPUs with at least 1Gb of RAM. It only requires a hash rate in the H/s.

These five are the most commonly used algorithms in the cryptocurrency world. We hope this article helped you understand them a little bit better, and decide which currency is the most profitable to mine.