A rainbow table is a pre-computed table for reversing cryptographic hash functions, usually for cracking password hashes. Tables are usually used in recovering a plaintext password up to a certain length consisting of a limited set of characters. It is a practical example of a space/time trade-off, using less computer processing time and more storage than a brute-force attack which calculates a hash on every attempt, but more processing time and less storage than a simple lookup table with one entry per hash. Use of a key derivation function that employs a salt makes this attack infeasible.
Rainbow tables effectively solve the problem of collisions with ordinary hash chains by replacing the single reduction function R with a sequence of related reduction functions R1 through Rk. In this way, for two chains to collide and merge they must hit the same value on the same iteration. Consequently, the final values in each chain will be identical. A final postprocessing pass can sort the chains in the table and remove any "duplicate" chains that have the same final value as other chains. New chains are then generated to fill out the table. These chains are not collision-free (they may overlap briefly) but they will not merge, drastically reducing the overall number of collisions.
Using sequences of reduction functions changes how lookup is done: because the hash value of interest may be found at any location in the chain, it's necessary to generate k different chains. The first chain assumes the hash value is in the last hash position and just applies Rk; the next chain assumes the hash value is in the second-to-last hash position and applies Rk−1, then H, then Rk; and so on until the last chain, which applies all the reduction functions, alternating with H. This creates a new way of producing a false alarm: if we "guess" the position of the hash value wrong, we may needlessly evaluate a chain.
Although rainbow tables have to follow more chains, they make up for this by having fewer tables: simple hash chain tables cannot grow beyond a certain size without rapidly becoming inefficient due to merging chains; to deal with this, they maintain multiple tables, and each lookup must search through each table. Rainbow tables can achieve similar performance with tables that are k times larger, allowing them to perform a factor of k fewer lookups.