sha256 stands for Secure Hash Algorithm-256. It is a hash function computed with 32-bit words. It was designed by the US National Security Agency (NSA). It is used to authenticate Debian GNU/Linux software packages, in the DKIM message signing standard and many other applications.

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It turns out that the SHA-256 algorithm used for mining is pretty simple and can in fact be done by hand. Not surprisingly, the process is extremely slow compared to hardware mining and is entirely impractical. But performing the algorithm manually is a good way to understand exactly how it works.