What both algorithms actually do
MD5 and SHA-256 are both cryptographic hash functions — they take an input of any size and produce a fixed-length output (128 bits for MD5, 256 bits for SHA-256) such that the same input always produces the same output, and even a tiny change to the input produces a completely different result. Where they differ isn't really what they do, but how well they hold up against someone deliberately trying to break that guarantee.
Why MD5 is considered broken
A secure hash function needs to be collision-resistant — it should be computationally infeasible to find two different inputs that produce the same hash. MD5's collision resistance was broken by researchers years ago, and creating an MD5 collision today is fast and practical rather than merely theoretical. That doesn't mean MD5 hashes are meaningless everywhere — for something like a quick, non-adversarial duplicate-file check, a broken collision guarantee simply doesn't matter, since nobody's trying to trick the system. It absolutely does matter anywhere a malicious actor could benefit from engineering a collision, which is why MD5 has been phased out of security contexts industry-wide.
Generate both hashes
Where SHA-256 stands today
SHA-256, part of the SHA-2 family, has no known practical collision attack and remains the widely recommended default for file integrity verification, digital signatures, and blockchain applications (it's the hash function Bitcoin uses, among others). It's slower to compute than MD5, which is a non-issue for verifying a file's integrity but is precisely why SHA-256 alone still isn't the right choice for password storage — its speed, an advantage for legitimate integrity checks, is a liability against an attacker trying to guess passwords by brute force at high speed.
The practical decision
For anything security-sensitive — verifying a download hasn't been tampered with, checking data integrity, generating a digital fingerprint that needs to resist deliberate forgery — use SHA-256 (or a stronger SHA-2/SHA-3 variant) rather than MD5. For password storage specifically, neither raw MD5 nor raw SHA-256 is the right tool; use a purpose-built, deliberately slow algorithm like bcrypt, scrypt, or Argon2 instead, which are designed to resist brute-force guessing in a way general-purpose hash functions aren't. MD5 remains fine for low-stakes, non-adversarial uses like a quick duplicate-content check where nobody has any incentive to engineer a collision.