How can the use of outdated functions like mysql_query and md5 impact the security and functionality of a PHP application?

Using outdated functions like mysql_query and md5 can impact the security and functionality of a PHP application because they are vulnerable to SQL injection attacks and are considered weak for hashing passwords, respectively. To improve security and functionality, it is recommended to use parameterized queries with prepared statements for database interactions and to use stronger hashing algorithms like password_hash for securely storing passwords.

// Using parameterized queries with prepared statements for database interactions
$stmt = $pdo->prepare("SELECT * FROM users WHERE username = :username");
$stmt->bindParam(':username', $username);
$stmt->execute();
$results = $stmt->fetchAll();

// Using password_hash for securely hashing passwords
$password = $_POST['password'];
$hashed_password = password_hash($password, PASSWORD_DEFAULT);