It was definitely a bad choice. I wasn't there so I can only speculate. My guess is because it is sort of ubiquitous and thus a low-hanging fruit and devs didn't know better, or the related corollary, it's what S3 uses for ETags, so it probably seemed logical. Either way, seems like someone did it and didn't know better, no one agrees on a fix or whether it's even necessary to change, and thus it's stuck for now.
There's an ongoing discussion about replacing/configuring the hash function, and it looks like there might be some movement toward replacing the hash and other speedups in 3.0
https://github.com/iterative/dvc/issues/3069
> We not only want to switch to a different algorithm in 3.0, but to also provide better performance/ui/architecture/ecosystem for data management, and all of that while not seizing releases with new features (experiements, dvc machine, plots, etc) and bug fixes for 2.0, so we've been gradually rebuilding that and will likely be ready for 3.0 in the upcoming months. - https://github.com/iterative/dvc/issues/3069#issuecomment-93...
