What is a Digital Signature and How Does It Work?

A digital signature is a part of a cryptographic mechanism used to authenticate digital data. These signatures might serve the basic purpose of handwritten signatures, but they are way more complex and secure.

A digital signature is simply like a code attached to a digital document or message. After a digitally signed message gets generated and delivered to the sender, they can use the corresponding public key to verify that the message wasn’t tampered with during the delivery process.

While the use of cryptographic signatures to encrypt messages and data dates back thousands of years, digital signatures are a recent invention. Let’s understand the basics of digital signatures and why they are so important.

The Working of Digital Signatures

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Digital signatures used in the field of cryptocurrency include important steps like hashing, signing, and verification of data or messages.


Hashing is the first step in the creation of digital signatures. Hashing algorithms are used for this process, and a hash value gets generated. Hash values are always the same length regardless of the size of the message being hashed.

However, keep in mind that hashing the data is not compulsory to attach a digital signature, as normal messages can be digitally signed without using any type of hashing algorithm.

But in the case of cryptocurrency, all the data is hashed because the fixed length of hashed data eases the data transfer process.


After a piece of information or a message is hashed, it needs to be digitally signed by the sender. Every cryptography algorithm has its own unique mechanism of hashing and signing the data.

After the message gets digitally signed with a private key and is sent to the receiver, its authenticity can be verified by the receiver with the help of the public key.

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However, if the sent message does not include the private key, the receiver won’t be able to use the public key to verify the authenticity of the message. While both the private and public keys are generated by the sender, only the public key is shared with the receiver.

Every digital signature is unique and is related to the message being sent. This is unlike handwritten signatures, which are always the same regardless of the content contained in the message.


The sender has to attach the private key to the message after hashing it. The private key is used to generate a digital signature. Every digital signature is unique, like a fingerprint, and is specific to the message being sent.

On the other hand, the receiver has to use the public key to verify the digital signature and check if the message is authentic and sent by the right sender.

Since private keys are like the sender’s digital identity, they have to keep them secret. If someone else gets their hands on the sender’s private keys, they can imitate the sender and sign digital messages with their private keys.

In the case of cryptocurrency, private keys attached to our digital wallet can be used by anyone to access that wallet without the permission of the owner, and all of the assets in that wallet can be sent to another wallet in the form of irreversible transactions.

The Importance of Digital Signatures

Digital signatures are important to ensure the authenticity and integrity of data, as well as to make data transfers non-repudiable.

With the help of digital signatures created with private keys, the receiver can make sure that the message is not changed along its way from the sender to the receiver. If the message gets tampered with during delivery, the public key will generate a completely new signature.

Since private keys are kept secret by the sender, the receiver can always be sure that the message was sent by the right sender and that it was not tampered with by anyone else.

Unless the private keys are compromised, the messages are always authentic and unaltered. These are some of the reasons why digital signatures are so important.

Author: Isacco Genovesi

Isacco writes news articles, reviews and guides about cryptocurrencies including technical analysis, blockchain events, coin prices marketcap and detailed reviews on crypto exchanges and trading platforms.

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