Scrypt is a cryptographic key derivation function and a password-based key derivation function (PBKDF) designed to be more memory-intensive than traditional hash functions. It was introduced in 2009 by Colin Percival as a part of the Tarsnap online backup service to provide a more secure method for key derivation.

Scrypt is particularly popular in the field of cryptocurrency, where it is used in the Proof of Work (PoW) algorithms of several cryptocurrencies, most notably Litecoin. Unlike Bitcoin's SHA-256 PoW, scrypt requires significant memory resources, making it less susceptible to the kind of hardware acceleration that has led to the development of powerful Bitcoin mining rigs.

The key feature of scrypt is its memory-hard nature, which makes it computationally expensive to perform large-scale custom hardware attacks, thus increasing the cost of brute-forcing passwords or cryptographic keys. This makes scrypt a valuable tool for protecting sensitive information, especially when combined with other security measures.

Scrypt's use extends beyond cryptocurrencies and password hashing; it's also used in various security applications, including file encryption, disk encryption, and authentication protocols. Its resistance to hardware-based attacks and its adaptability make scrypt an essential component in modern cryptographic systems, enhancing data security in numerous contexts.