A digital signature is a cryptographic process that is used to confirm the validity and integrity of digital data. Digital is not equivalent to a traditional handwritten signature. It is more complex and secure.
A digital signature is a code that is linked to a message or a document. The code, once formed, serves as verification that the message was not tampered with on its journey from sender to receiver.
Although the notion of utilising cryptography to secure communications stretches back to ancient times, digital signature systems became a possibility in the 1970s, owing to the advent of public-key cryptography (PKC).
How do digital signatures function?
A digital signature system in the context of cryptocurrencies typically consists of three main steps: hashing, signing, and verifying.
Hashing
Hashing is a cryptographic procedure that turns any type of data into a unique string of text. So, the sender message or digital data is hashed as the first step. This is accomplished by passing the data through a hashing algorithm, which generates a hash value (i.e., the message digest). As previously stated, the messages can be of varying sizes, but when hashed, all of their hash values have the same length. This is a hash function’s most fundamental characteristic.
However, hashing the data is not required for creating a digital signature because a private key can be used to sign a message that was not hashed at all. However, in the case of cryptocurrencies, the data is always hashed since working with fixed-length digests simplifies the entire process.
Signing
After the data has been hashed, the message’s sender must sign it. At this point, public-key cryptography comes into play. There are several sorts of digital signature algorithms, each with its unique method. However, the hashed message will be signed with a private key, and the recipient will be able to validate it using the matching public key (provided by the signer).
To put it another way, if the private key is not included when the signature is formed, the message’s receiver will be unable to verify its validity using the accompanying public key. The sender generates both public and private keys, but only the public key is communicated with the receiver.
It’s important to note that digital signatures are linked to the content of each message. Each digitally signed communication will have a unique digital signature.
Verifying
Let’s look at an example to show the entire procedure up to the last stage of verification. Consider the following scenario: Dishank writes a message to Nishant, hashes it, and then combines the hash value with his private key to form a digital signature. The signature will serve as a one-of-a-kind digital fingerprint for that specific communication.
When Nishant gets the message, he may use the public key supplied by Dishank to validate the digital signature. Nishant can be certain that the signature was made by Dishank since only he holds the private key that corresponds to that public key.
What is the significance of digital signatures?
Digital signatures are frequently employed to accomplish three goals: data integrity, authentication, and non-repudiation.
Data integrity: Nishant can confirm that Dishank’s message was not tampered with along the way. Any changes to the message would result in an entirely new signature.
Authenticity: Nishant may use Dishank’s public key to authenticate that the digital signatures were made by Dishank and no one else, as long as Dishank’s private key is kept hidden.
Non-repudiation: Once the signature is created, Nishant will be unable to dispute having signed it in the future, unless his private key is compromised in some way.
Hash functions and public-key cryptography are at the heart of digital signature systems, which are currently used in a variety of applications. Digital signatures, when correctly applied, may strengthen security, assure integrity, and enable the authentication of all types of digital data.
Digital signatures are used to sign and approve crypto transactions on the blockchain. They are especially significant for crypto since they ensure that coins can only be spent by those who have the associated private keys.
