What is this digital signature all about, and what is it used for in bitcoin technology?
What helped me understand the concept was first understand Electronic Signatures and what problems Digital Signatures solve.
Most of us engage with electronic signatures, often without realizing it. Here are some commonplace examples:
- Agreeing to the terms and conditions of a software or online service by clicking "I Accept."
- Signing on digital pads after credit card transactions at retail outlets.
- Using signing platforms, where one can draw or upload an image of your signature to digitally sign a document.
The problem with electronic signatures is that they rely on a trusted third party to validate the authenticity of the signatory and the integrity of the signed data. For instance, when using e-signature platforms, the platform itself acts as the third party, ensuring that the signatory is who they claim to be and that the document hasn't been tampered with after signing.
In Bitcoin, who will guarantee that a signature is valid?
That's where digital signatures come in:
Digital Signature:
It is a specific type of electronic signature. Rooted in cryptography, it involves creating a unique digital code (or 'signature') using a private cryptographic key. When others receive the digitally signed document, they can use the signatory's public cryptographic key to verify the document's authenticity and ensure it remains unaltered since being signed.
A digital signature is created by taking the message you want to sign and applying a mathematical formula with your private key. Anyone who knows your public key can mathematically verify that this signature was indeed created by the holder of the associated private key (but without knowing the private key itself).
They guarantee:
- Authentication (Proves that the the sender is the one who sent the message/transaction);
- Integrity (proves the message/transaction was not modified in transit);
Hope this can help!