Digital Signature

The digital signature is a cryptographic technique that guarantees the uniqueness and integrity of information. In fact, it’s something like the usual “confirmation signature”, only much more resistant to fakes.

Any digital signature is a code. It can be attached to any document to attest to its authenticity. Forging such a signature is extremely difficult, and changing the contents of a document is even more difficult. The active use of this technology became possible thanks to the creation of public-key cryptography. However, at the current moment, other methods of creating unique digital signatures are also used.

Public Key Cryptography

This method of encryption implies the existence of two types of keys - a private one, which only the owner has, and a public one, which can be provided to everyone. They are formed on the basis of the symmetric algorithm, but knowledge of the public key does not allow to decrypt or determine the content of the private one. However, there is a direct connection between them, making at the program level.

In addition, if you add a private key to digital information and pass them through a hash function, you can get a unique hash, the authenticity of which can be verified automatically by using a public key.

An important point. When generating digital signatures, additional encryption methods can be used, but this method is not used in the Bitcoin blockchain. Confirmation of the transaction is making by a digital signature based on the private key attached to the description of the transaction. This case is called the ECDSA algorithm or the "Elliptic Curve Digital Signature Algorithm."

Hash function

This is a special program that converts any information passed through it into a hash or digest - a unique combination of letters and numbers of a given length. Any change in the initial data will lead to the formation of a completely different hash. That is why most blockchain-based systems actively use this data encryption method.

Work principles

• Data hashing. An extremely important point during work with the blockchain. Despite the fact that a simple signature based on a private key is sufficient for data verification, this signature is always passed through its own hash algorithm. Just to get a digest of a given length and format, which is much easier to work with the system.
• Signature. There are a number of unidirectional algorithms that form a digital signature based on a private key. And other algorithms that allow you to confirm the authenticity of the result based on the public key. In addition, it is worth considering that this method of confirmation is generated not only on the basis of the private key, but also taking into account the contents of the message. Therefore, in each case, it will be unique. What makes impossible the "blind substitution" of one digital signature to confirm other content.
• Verification. A private key is always one, while there may be many public keys. And each owner of the public can, by using special algorithms, make sure that the received message is signed with a private key, but without understanding its contents. Therefore, the main task of any fraudster is to acquire a private key at any cost. Fortunately, the classical methods of social engineering are not suitable here - only a direct interception of the input messages.

What gives this confirmation method

• Data integrity. Any holder of a public key can verify the authenticity of information encrypted in private without decrypting its content.
• Authentication Any holder of a public key can make sure that he is dealing with a holder of a private key.
• Invariance. Data encrypted with a private key is uniquely owned by its owner. And transactions made under such conditions are not retroactive.

Possible disadvantages

• Algorithm Problems If the hash function is not complex enough, it becomes much easier to decrypt the contents of the digital signature.
• Implementation Issues. Even a fully working digital signature will not help if the final program does not accept it.
• The problem of ownership. Losing a private key is the worst thing that can happen to the owner of cryptocurrency assets. It’s the same as personally opening the door to the robbers and telling them in detail where exactly are all the money in the house.

Digital or electronic?

In short, each digital signature is electronic. But the opposite rule does not always work. Digital signatures are only those signatures that use public-key cryptography, hash functions and various encryption methods in their creation.

Use cases:

• Information Technology. Using this technology, you can achieve much greater security of Internet communications.
• Finance. Auditing, loans, expense reports, and other documents held together with a digital signature are almost impossible to forge and modify retroactively.
• Law. Business transactions and contracts, including the highest (government) level.
• Healthcare. Immutable prescriptions and medical data.
• Blockchain. The accuracy of any information transmitted. Confirmation of cryptocurrency transactions.

Conclusion

The use of digital signatures, as well as unique encryption and encryption algorithms, has led to the creation of unique electronic data. This is the foundation on which the modern cryptocurrency system is built.

Digital signatures are the main confirmation of the reliability of cryptocurrency transactions, indicating that the person who actually owns them spends the coins.

However, the use of this method of information protection is not limited only to crypto-economics. Almost any branch of human activity that deals with unique electronic information can be adapted to use this confirmation method.