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Public-key cryptography, or PKC, refers to a cryptographic system that makes use of a pair of keys:
The two keys are mathematically related and can be used for both data encryption and digital signatures.
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In the context of cryptocurrencies, a digital signature system often consists of three basic steps:
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Hashing the data is not a must for producing a digital signature because one can use a private key to sign a message that wasn’t hashed at all.
But for cryptocurrencies, the data is always hashed because dealing with fixed-length digests facilitates the whole process.
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After the information is hashed, the sender of the message needs to sign it. This is the moment where public-key cryptography comes into play. There are several types of digital signature algorithms, each with its own particular mechanism.
But essentially, the hashed message will be signed with a private key, and the receiver of the message can then check its validity by using the corresponding public key (provided by the signer).
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Let’s take an example to illustrate the whole process until the final step of verification. Imagine that Alice writes a message to Bob, hashes it, and then combines the hash value with her private key to generate a digital signature.
The signature will work as a unique digital fingerprint of that particular message.
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Digital signatures are often used to achieve three results:
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Digital signatures can be applied to various kinds of digital documents and certificates. As such, they have several applications. Some of the most common use cases include:
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The major challenges faced by digital signature schemes rely on at least three requirements:
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Digital signatures relate to one particular kind of electronic signatures - which refer to any electronic method of signing documents and messages. Thus, all digital signatures are electronic signatures, but the opposite isn’t always true.
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