Thank you all for your help. I am the OP.

I haven't looked at the link that talks about the probability of collision. 
Intuitively, I still wonder how the chances of collision can be so low. We are 
reducing a 4K block to just 256 bits. If the chances of collision are so low, 
*theoretically* it is  possible to reconstruct the original block from the 
256-bit signature by using a simple lookup. Essentially, we would now have 
world's best compression algorithm irrespective of whether the data is text or 
binary. This is hard to digest.

Peter
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