Both SHA256 and MDA5 are hashing algorithms. They take your input data, in this case your file, and output a 256/128-bit number. This number is a checksum. There is no encryption taking place because an infinite number of inputs can result in the same hash value, although in reality collisions are rare.
SHA256 takes somewhat more time to calculate than MD5, according to this answer.
Offhand, I'd say that MD5 would be probably be suitable for what you need.