What Is a Digital Signature? | Binance Academy - Deepstash

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## What Is A Digital Signature?

• A digital signature is a cryptographic mechanism used to verify the authenticity and integrity of digital data.
• We may consider it as a digital version of the ordinary handwritten signatures, but with higher levels of complexity and security.
• In simple terms, we may describe a digital signature as a code that is attached to a message or document. After generated, the code acts as proof that the message hasn’t been tampered with along its way from sender to receiver.

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## Public-key cryptography (PKC)

Public-key cryptography, or PKC, refers to a cryptographic system that makes use of a pair of keys:

• one public key
• one private key.

The two keys are mathematically related and can be used for both data encryption and digital signatures.

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## How digital signatures work

In the context of cryptocurrencies, a digital signature system often consists of three basic steps:

• hashing
• signing
• Verifying.

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## Hashing the data

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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## Signing

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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## Verifying

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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## Why are digital signatures important?

Digital signatures are often used to achieve three results:

• data integrity,
• authentication,
• non-repudiation.

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## Use cases

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:

• Information Technology. To enhance the security of Internet communication systems.
• Finance. Digital signatures can be implemented to audits, expense reports, loan agreements, and much more.
• Legal. Digital signing of all sorts of business contracts and legal agreements, including governmental papers.
• Healthcare. Digital signatures can prevent fraud of prescriptions and medical records.
• Blockchain.

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## Limitations

The major challenges faced by digital signature schemes rely on at least three requirements:

• Algorithm. The quality of the algorithms used in a digital signature scheme is important. This includes the choice of reliable hash functions and cryptographic systems.
• Implementation. If the algorithms are good, but the implementation is not, the digital signature system will likely present flaws.
• Private Key. If the private keys get leaked or somehow compromised, the properties of authenticity and non-repudiation will be invalidated.

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## Electronic signatures vs. digital signatures

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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