SHA-256, or Secure Hash Algorithm 256-bit, is a cryptographic hash function used in many Bitcoin processes. It is used to hash blocks in mining (proof of work) via double SHA-256 (two rounds of SHA-256), create Bitcoin addresses from public keys (with RIPEMD-160), generate transaction IDs (txid), also via double SHA-256, to secure transactions, and construct the Merkle tree for transaction verification.
The SHA-256 algorithm is part of the SHA-2 family published by the National Institute of Standards and Technology (NIST). It generates a 256-bit (32-byte) hash value, making it ideal for ensuring data integrity in Bitcoin and other technological applications, such as digital signatures, SSL certificates for secure web browsing, software security, system integrity verification, key derivation functions used in password hashing (such as PBKDF2), and more.