Hashing vs encryption: Key differences & main uses

The terms "hashing" and "encryption" are routinely misused across the technology industry, from blog posts to official documentation. This widespread confusion creates security risks when developers implement the wrong method for their specific use case.

While both techniques transform data, they serve fundamentally different purposes in information security. When you get this wrong, the consequences can be severe.

Passwords stored with reversible encryption can be cracked if keys are compromised. Sensitive data "protected" with hashing can't be recovered when you actually need it.

Understanding which method to use when requires grasping their fundamental differences and appropriate applications. And that’s what this piece breaks down—the difference between hashing and encryption, and when to use each.

What is a hashing function?

A hashing function is a mathematical algorithm that transforms any input data into a fixed-length string of characters called a hash or digest. Think of it as a digital fingerprint for your data. No matter whether you input a single word or an entire book, the hash function will always produce an output of the same length.

The key characteristic that makes hashing unique is that it's a one-way process. Once you hash something, you can't reverse the process to get back the original data. This might sound limiting, but it's actually the feature that makes hashing so powerful for certain security applications.

Hashing functions are designed with specific properties that make them secure and reliable. They exhibit what's called the "avalanche effect," where even the tiniest change to the input produces a completely different hash output. Change just one letter in a document, and the entire hash changes dramatically.

How does hashing work?

The hashing process starts when you feed input data into a hash function algorithm. The algorithm then performs a series of mathematical operations on this data, breaking it down, mixing it up, and transforming it according to predetermined rules.

During this process, the algorithm ensures that the same input will always produce the same hash output. This consistency is crucial for verifying data integrity. If you hash a file today and get a specific result, then hash the same file next week and get a different result, you know something has changed.

Good hash functions also demonstrate collision resistance, meaning it's extremely difficult to find two different inputs that produce the same hash output. While collisions are theoretically possible, cryptographically secure hash functions make them so unlikely that they're practically impossible to exploit.

The algorithm also provides pre-image resistance, which means that even if someone has the hash output, they can't work backwards to determine what the original input was. This property is what makes hashing suitable for storing passwords securely.

What are some examples of hash functions?

MD5

MD5 (Message-digest algorithm) produces a 128-bit hash and was once widely used across the internet. However, MD5 is now considered cryptographically broken due to vulnerabilities that allow for collision attacks. While still useful for basic checksums and non-security applications, it should not be used for password hashing or other security-critical functions.

SHA-1

SHA-1 (Secure hash algorithm) generates a 160-bit hash and was the standard for many years. Like MD5, SHA-1 has been deprecated for security applications due to discovered vulnerabilities. Major browsers and security protocols have moved away from SHA-1, though it's still encountered in legacy systems.

SHA-256

SHA-256 is part of the SHA-2 family and produces a 256-bit hash. It's currently considered secure and is widely used in applications like blockchain technology, digital certificates, and password verification systems. SHA-256 offers strong collision resistance and is approved for government and commercial use.

Bcrypt

Bcrypt is specifically designed for password hashing and includes built-in salt generation and configurable work factors. Unlike general-purpose hash functions, bcrypt is intentionally slow, making it much more resistant to brute-force attacks. It's considered one of the best choices for storing user passwords.

Argon2

Argon2 was selected as the winner of the 2015 password hashing competition, and is currently considered a top algorithm. It offers protection against both time-memory trade-off attacks and side-channel attacks, with configurable memory usage, time cost, and parallelism parameters.

What is encryption?

Encryption is the process of converting readable data (plaintext) into an unreadable format (ciphertext) using mathematical algorithms and keys. Unlike hashing, encryption is designed to be reversible. With the correct key, encrypted data can be decrypted back to its original form.

The primary purpose of encryption is to ensure confidentiality. When you encrypt data, you're making it unreadable to anyone who doesn't possess the proper decryption key. This makes encryption essential for protecting sensitive information during storage and transmission.

Types of encryption

Symmetric encryption

Symmetric encryption uses the same key for both encryption and decryption. This approach is generally faster and more efficient for large amounts of data. However, the challenge lies in securely sharing the key between parties who need to encrypt and decrypt the data. Common symmetric algorithms include AES (advanced encryption standard) and DES (data encryption standard).

Asymmetric encryption

Asymmetric encryption (or public-key cryptography) uses a pair of mathematically related keys: a public key and a private key. Data encrypted with the public key can only be decrypted with the corresponding private key, and vice versa. This eliminates the key-sharing problem of symmetric encryption but is typically slower and more computationally intensive. RSA (Rivest-Shamir-Adleman) and ECC (elliptic curve cryptography) are popular asymmetric encryption methods.

How does encryption work?

Encryption begins with plaintext data and applies a mathematical algorithm using a specific key to transform that data into ciphertext. The algorithm scrambles the data according to the key's specifications, making it unreadable without the proper decryption key.

The encryption process involves several key components: the plaintext (original data), the encryption algorithm, the key, and the resulting ciphertext. The algorithm defines how the transformation occurs, while the key determines the specific way the transformation is applied.

During decryption, the process reverses. The ciphertext is fed into the decryption algorithm along with the appropriate key, which transforms the scrambled data back into readable plaintext. The strength of the encryption depends on the algorithm used and the length and randomness of the key.

Modern encryption algorithms are designed to ensure that without the correct key, the ciphertext appears completely random and provides no useful information about the original data, even if an attacker knows the encryption algorithm being used.

Common encryption techniques and algorithms

Shifting

Shifting techniques, like the classic Caesar cipher, move letters a fixed number of positions in the alphabet. While historically significant and easy to understand, shifting methods offer minimal security by modern standards and are primarily used for educational purposes or simple obfuscation rather than true security.

Substituting

Substitution methods replace each character in the plaintext with a different character according to a predetermined system. Modern block ciphers like AES use sophisticated substitution techniques as part of their encryption process, but simple substitution ciphers on their own are vulnerable to frequency analysis attacks.

Symbols

Symbol-based encryption involves replacing text with symbols, numbers, or other characters. While this can provide some obscurity, symbol substitution alone doesn't offer strong security unless combined with other cryptographic techniques and proper key management practices.

When should you use hashing or encryption?

Choosing between hashing and encryption depends entirely on what you're trying to accomplish. The best approach is to consider your specific use case and security requirements.

Hashing use cases

Password storage

Hashing is the standard method for storing user passwords. When a user creates an account, you hash their password and store only the hash. During login, you hash the entered password and compare it to the stored hash. This way, even if your database is compromised, the actual passwords remain protected.

Data integrity verification

Use hashing to verify that data hasn't been tampered with or corrupted. By comparing the hash of received data with the original hash, you can quickly detect any changes. This is common in software downloads, where hash values help users verify they've downloaded uncorrupted files.

Digital signatures

Hashing plays a crucial role in digital signatures, where the hash of a document is encrypted with a private key. This allows others to verify both the document's integrity and its origin using the corresponding public key.

Unique identifiers

Hash functions can generate unique identifiers for data objects, files, or database records. This is particularly useful in distributed systems where you need consistent, collision-resistant identifiers across multiple systems.

Encryption use cases

Secure communication

Use encryption to protect data transmitted over networks, such as HTTPS connections, email communications, or messaging applications. Encryption ensures that even if communications are intercepted, they remain unreadable to unauthorized parties.

Data protection at rest

Encrypt sensitive data stored on servers, databases, or local devices. This protects information if storage devices are stolen or if unauthorized users gain access to the storage system.

Secure transactions

Financial transactions, payment processing, and e-commerce applications rely heavily on encryption to protect sensitive information like credit card numbers and personal details during processing and storage.

Confidential data sharing

When you need to share sensitive information with specific parties, encryption allows you to control who can access the data by controlling key distribution.

Some modern security implementations use hybrid approaches that combine both hashing and encryption. For example, password authentication systems might hash passwords for storage while using encryption to protect the transmission of those passwords over networks.

Streamline IT security management with Rippling

Managing security across your organization requires more than just understanding hashing and encryption. Rippling's comprehensive IT security platform helps you implement these concepts effectively through integrated identity and access management, device security, and data protection tools.

Rippling's identity and access management system combines user provisioning, single sign-on, and dynamic multi-factor authentication to ensure the right people have the right access at the right time. The platform includes built-in password management capabilities, device encryption enforcement, and automated workflows that ensure security protocols are consistently applied across user lifecycle events, from onboarding to offboarding.

With Rippling's unified security approach, you can implement proper password policies and maintain compliance with security frameworks like SOC 2 Type II, ISO 27001, and CSA STAR Level 2. The platform provides enterprise-grade security features with regular audits to ensure your data stays protected.

Whether you're managing a small team or a global workforce, Rippling provides the tools needed to implement comprehensive security practices without the complexity of managing multiple point solutions.

Hashing vs encryption FAQs

Why is hashing not considered encryption?

Hashing is not considered encryption because it's a one-way process that cannot be reversed. Encryption is designed to be reversible with the proper key, while hashing permanently transforms data into a fixed-length output. The fundamental purpose differs: hashing verifies integrity and creates identifiers, while encryption protects confidentiality.

What are the advantages of hashing over encryption?

Hashing offers several advantages, including faster processing speeds, no key management requirements, consistent output length regardless of input size, and perfect suitability for integrity verification. Hashing also provides irreversibility, which is actually beneficial for applications like password storage, where you never want to recover the original data.

Is SHA256 encryption or hashing?

SHA256 is a hashing algorithm, not encryption. It's part of the SHA-2 family of cryptographic hash functions that produces a fixed 256-bit hash value. SHA256 is one-way and irreversible, making it suitable for data integrity verification, digital signatures, and blockchain applications, but not for scenarios where you need to recover the original data.

Is hashing reversible?

No, cryptographically secure hashing is not reversible. This is by design and is one of the fundamental properties that makes hashing useful for security applications. While password attacks like rainbow tables and brute force attacks might attempt to find inputs that produce known hashes, proper hashing implementations with salts make reversal computationally infeasible.

This blog is based on information available to Rippling as of July 3, 2025.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.