Crypto signatures

A cryptographic signature is required to complete any crypto transaction on a public blockchain.

A signature is the application of a private key with a public key and is required anytime assets are moved from one address to another.

Signatures, like public and private keys, play a really important role in the overall security and healthy functioning of the crypto system.

Public keys are used for verifying the contents of a crypto address, and kind of work like a public escrow function so the people involved in the transaction don’t actually have to trust one another. Instead they can confirm that what is being represented is accurate.

Hashing, or a hash function, also plays a role in how signatures are used in public key cryptography. Data is generally hashed for the middle part of a transaction so it can’t be tampered with or altered during transit.

One way to think about how this all fits together:

  • When a transaction is initiated, it is hashed into a uniform output that can then be transmitted and later validated on a blockchain.
  • The transaction hash is then encrypted using a sender’s private key, creating a digital signature
  • A recipient uses the sender’s public key to decrypt the signature and verify the contents of the message

There are different kinds of digital signatures that people use regularly for routine internet tasks where security and privacy are important, such as email or bank transactions.

Different digital signature types are created using different kinds of algorithms.

Most standard crypto/blockchain-based digital signatures use the Elliptical Curve Digital Signature Algorithm.

There are also other kinds of signatures used in crypto including:

  • Zk signatures — based on zero knowledge proofs, which is a signature setup that uses the same concept of public key cryptography, but reveals fewer details about the public key to protect the overall privacy of the user.
  • Ring signatures — ring signatures are another example of privacy-protecting digital signatures because the actual public key used to sign a transaction is effectively scrambled within a group of other keys, making it difficult to pinpoint which key was actually part of the transaction.

One of the most interesting dynamics within the crypto space is the interplay between privacy and overall network security. Undoubtedly, future innovations related to this dynamic will involve the public key system.

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