How Does the Concept of Hashing Relate to the Pricing of Derivatives?

While cryptographic hashing is not directly used in the mathematical pricing of derivatives like the Black-Scholes model, the underlying concept of data integrity is relevant. Hashing ensures the immutability of historical market data, which is crucial for back-testing and parameter calibration in pricing models.

Furthermore, in tokenized derivatives on a blockchain, hashing secures the contract's terms and execution data. It ensures that the inputs to the pricing model (e.g. historical volatility) are trustworthy.