diff --git a/.bitmap b/.bitmap
index d52e0127f2b2..5cee5413f9b3 100644
--- a/.bitmap
+++ b/.bitmap
@@ -380,6 +380,13 @@
         "mainFile": "index.ts",
         "rootDir": "scopes/component/component-tree"
     },
+    "component-version": {
+        "name": "component-version",
+        "scope": "teambit.component",
+        "version": "1.0.3",
+        "mainFile": "index.ts",
+        "rootDir": "components/component-version"
+    },
     "component-writer": {
         "name": "component-writer",
         "scope": "teambit.component",
diff --git a/components/component-version/exceptions/index.ts b/components/component-version/exceptions/index.ts
new file mode 100644
index 000000000000..fb67ac3e694f
--- /dev/null
+++ b/components/component-version/exceptions/index.ts
@@ -0,0 +1,3 @@
+import InvalidVersion from './invalid-version';
+
+export { InvalidVersion };
diff --git a/components/component-version/exceptions/invalid-version.ts b/components/component-version/exceptions/invalid-version.ts
new file mode 100644
index 000000000000..339d9b601e5c
--- /dev/null
+++ b/components/component-version/exceptions/invalid-version.ts
@@ -0,0 +1,7 @@
+import { BitError } from '@teambit/bit-error';
+
+export default class InvalidVersion extends BitError {
+  constructor(version?: string | null) {
+    super(`error: version ${version || '(empty)'} is not a valid semantic version. learn more: https://semver.org`);
+  }
+}
diff --git a/components/component-version/index.ts b/components/component-version/index.ts
new file mode 100644
index 000000000000..1654132c7fe6
--- /dev/null
+++ b/components/component-version/index.ts
@@ -0,0 +1,23 @@
+import { Version, LATEST_VERSION } from './version';
+import versionParser, {
+  isHash,
+  isSnap,
+  isTag,
+  HASH_SIZE,
+  SHORT_HASH_MINIMUM_SIZE,
+  generateSnap,
+} from './version-parser';
+import { InvalidVersion } from './exceptions';
+
+export {
+  Version,
+  LATEST_VERSION,
+  versionParser,
+  isHash,
+  isSnap,
+  isTag,
+  generateSnap,
+  InvalidVersion,
+  HASH_SIZE,
+  SHORT_HASH_MINIMUM_SIZE,
+};
diff --git a/components/component-version/version-parser.spec.ts b/components/component-version/version-parser.spec.ts
new file mode 100644
index 000000000000..1b39933d2c82
--- /dev/null
+++ b/components/component-version/version-parser.spec.ts
@@ -0,0 +1,29 @@
+import { expect } from 'chai';
+
+import versionParser from './version-parser';
+import { InvalidVersion } from './exceptions';
+
+describe('versionParser()', () => {
+  it('should return latest version representation', () => {
+    const version = versionParser('latest');
+    expect(version.latest).to.equal(true);
+    expect(version.versionNum).to.equal(null);
+  });
+
+  it('should throw invalid version', () => {
+    const version = () => versionParser('$1');
+    expect(version).to.throw(InvalidVersion);
+  });
+
+  it('should return a concrete version', () => {
+    const version = versionParser('0.0.1');
+    expect(version.latest).to.equal(false);
+    expect(version.versionNum).to.equal('0.0.1');
+  });
+
+  it('should parse given version as latest', () => {
+    const version = versionParser('latest');
+    expect(version.versionNum).to.equal(null);
+    expect(version.latest).to.equal(true);
+  });
+});
diff --git a/components/component-version/version-parser.ts b/components/component-version/version-parser.ts
new file mode 100644
index 000000000000..243530e1be32
--- /dev/null
+++ b/components/component-version/version-parser.ts
@@ -0,0 +1,79 @@
+import semver from 'semver';
+import crypto from 'crypto';
+import { InvalidVersion } from './exceptions';
+import { Version, LATEST_VERSION } from './version';
+
+export const HASH_SIZE = 40;
+
+/**
+ * because the directory structure is `XX/YY....`, it needs to have at least three characters.
+ */
+export const SHORT_HASH_MINIMUM_SIZE = 3;
+
+function isLatest(versionStr: string): boolean {
+  return versionStr === LATEST_VERSION;
+}
+
+function isSemverValid(versionStr: string) {
+  return Boolean(semver.valid(versionStr));
+}
+
+function returnSemver(versionStr: string): Version {
+  return new Version(versionStr, false);
+}
+
+function returnLatest(): Version {
+  return new Version(null, true);
+}
+
+function returnSnap(hash: string): Version {
+  return new Version(hash, false);
+}
+
+/**
+ * a snap is a 40 characters hash encoded in HEX. so it can be a-f and 0-9.
+ * also, for convenience, a short-hash can be used, which is a minimum of 3 characters.
+ */
+export function isHash(str: string | null | undefined): boolean {
+  return typeof str === 'string' && isHex(str) && str.length >= SHORT_HASH_MINIMUM_SIZE && str.length <= HASH_SIZE;
+}
+
+/**
+ * a component version can be a tag (semver) or a snap (hash)
+ */
+export function isTag(str?: string): boolean {
+  return typeof str === 'string' && isSemverValid(str);
+}
+
+/**
+ * a component version can be a tag (semver) or a snap (hash).
+ * a snap must be 40 characters long and consist of a-f and 0-9. (hex).
+ */
+export function isSnap(str: string | null | undefined): boolean {
+  return isHash(str) && typeof str === 'string' && str.length === HASH_SIZE;
+}
+
+/**
+ * generate a random valid snap hash (which is a 40 characters long hash encoded in HEX)
+ */
+export function generateSnap(): string {
+  // @ts-ignore until @types/node is updated to v18 or above
+  return crypto.createHash('sha1').update(crypto.randomUUID()).digest('hex');
+}
+
+export default function versionParser(versionStr: string | null | undefined): Version {
+  if (!versionStr) return returnLatest();
+  if (isLatest(versionStr)) return returnLatest();
+  if (isSemverValid(versionStr)) return returnSemver(versionStr);
+  if (isHash(versionStr)) return returnSnap(versionStr);
+
+  throw new InvalidVersion(versionStr.toString());
+}
+
+/**
+ * check if the string consists of valid hexadecimal characters
+ */
+function isHex(str: string) {
+  const hexRegex = /^[0-9a-fA-F]+$/;
+  return hexRegex.test(str);
+}
diff --git a/components/component-version/version.spec.ts b/components/component-version/version.spec.ts
new file mode 100644
index 000000000000..bd9eeb426dfd
--- /dev/null
+++ b/components/component-version/version.spec.ts
@@ -0,0 +1,25 @@
+import { expect } from 'chai';
+
+import { Version } from './version';
+
+describe('Version', () => {
+  describe('toString()', () => {
+    it('should return latest', () => {
+      const version = new Version(null, true);
+      expect(version.toString()).to.equal('latest');
+    });
+
+    it('should return concrete version number', () => {
+      // @ts-ignore AUTO-ADDED-AFTER-MIGRATION-PLEASE-FIX!
+      const version = new Version(12, false);
+      expect(version.toString()).to.equal('12');
+    });
+
+    it('should throw an invalid version exception', () => {
+      const version = new Version(null, false);
+      expect(() => {
+        version.toString();
+      }).to.throw();
+    });
+  });
+});
diff --git a/components/component-version/version.ts b/components/component-version/version.ts
new file mode 100644
index 000000000000..f4069ef6ffb8
--- /dev/null
+++ b/components/component-version/version.ts
@@ -0,0 +1,33 @@
+import semver from 'semver';
+import { InvalidVersion } from './exceptions';
+
+export const LATEST_VERSION = 'latest';
+
+export class Version {
+  versionNum: string | null | undefined;
+  latest: boolean;
+
+  constructor(versionNum: string | null | undefined, latest: boolean) {
+    this.versionNum = versionNum;
+    this.latest = latest;
+    if (versionNum && latest) {
+      throw new Error(`a component version cannot have both: version and "latest"`);
+    }
+  }
+
+  toString() {
+    if (!this.versionNum && this.latest) return 'latest';
+    if (this.versionNum && !this.latest) return this.versionNum.toString();
+    throw new InvalidVersion(this.versionNum);
+  }
+
+  isLaterThan(otherVersion: Version): boolean {
+    if (!this.versionNum || this.versionNum === LATEST_VERSION) {
+      return true;
+    }
+    if (!otherVersion.versionNum || otherVersion.versionNum === LATEST_VERSION) {
+      return false;
+    }
+    return semver.gt(this.versionNum, otherVersion.versionNum);
+  }
+}
diff --git a/scopes/component/snapping/tag-model-component.ts b/scopes/component/snapping/tag-model-component.ts
index 36e7d9ae39cb..77a0e4f73720 100644
--- a/scopes/component/snapping/tag-model-component.ts
+++ b/scopes/component/snapping/tag-model-component.ts
@@ -1,7 +1,6 @@
 import mapSeries from 'p-map-series';
 import { isEmpty } from 'lodash';
 import { ReleaseType } from 'semver';
-import { v4 } from 'uuid';
 import { BitError } from '@teambit/bit-error';
 import { Scope } from '@teambit/legacy/dist/scope';
 import { ComponentID, ComponentIdList } from '@teambit/component-id';
@@ -15,7 +14,6 @@ import { getBasicLog } from '@teambit/legacy/dist/utils/bit/basic-log';
 import { Component } from '@teambit/component';
 import deleteComponentsFiles from '@teambit/legacy/dist/consumer/component-ops/delete-component-files';
 import logger from '@teambit/legacy/dist/logger/logger';
-import { sha1 } from '@teambit/legacy/dist/utils';
 import { AutoTagResult, getAutoTagInfo } from '@teambit/legacy/dist/scope/component-ops/auto-tag';
 import { getValidVersionOrReleaseType } from '@teambit/legacy/dist/utils/semver-helper';
 import { BuilderMain, OnTagOpts } from '@teambit/builder';
@@ -82,7 +80,7 @@ function updateDependenciesVersions(
 
 function setHashes(componentsToTag: ConsumerComponent[]): void {
   componentsToTag.forEach((componentToTag) => {
-    componentToTag.setNewVersion(sha1(v4()));
+    componentToTag.setNewVersion();
   });
 }
 
diff --git a/src/consumer/component/consumer-component.ts b/src/consumer/component/consumer-component.ts
index 154c390d500b..911888c6b7da 100644
--- a/src/consumer/component/consumer-component.ts
+++ b/src/consumer/component/consumer-component.ts
@@ -1,10 +1,10 @@
 import { ComponentID, ComponentIdList } from '@teambit/component-id';
 import fs from 'fs-extra';
-import { v4 } from 'uuid';
 import * as path from 'path';
 import R from 'ramda';
 import { IssuesList } from '@teambit/component-issues';
 import { BitId } from '@teambit/legacy-bit-id';
+import { generateSnap } from '@teambit/component-version';
 import { BitError } from '@teambit/bit-error';
 import { getCloudDomain, BIT_WORKSPACE_TMP_DIRNAME, BuildStatus, DEFAULT_LANGUAGE, Extensions } from '../../constants';
 import docsParser from '../../jsdoc/parser';
@@ -12,7 +12,7 @@ import { Doclet } from '../../jsdoc/types';
 import logger from '../../logger/logger';
 import { ScopeListItem } from '../../scope/models/model-component';
 import Version, { DepEdge, Log } from '../../scope/models/version';
-import { pathNormalizeToLinux, sha1 } from '../../utils';
+import { pathNormalizeToLinux } from '../../utils';
 import { PathLinux, PathOsBased, PathOsBasedRelative } from '../../utils/path';
 import ComponentMap from '../bit-map/component-map';
 import { IgnoredDirectory } from '../component-ops/add-components/exceptions/ignored-directory';
@@ -269,7 +269,7 @@ export default class Component {
     this.peerDependencies = new Dependencies(peerDependencies);
   }
 
-  setNewVersion(version = sha1(v4())) {
+  setNewVersion(version = generateSnap()) {
     this.previouslyUsedVersion = this.id.hasVersion() ? this.version : undefined;
     this.version = version;
   }