Digital Signature - what is it, how is it used?

Digital Signature is a technology that is a means, a tool for authenticating monetary transactions through a cryptographic mechanism.

Working in any digital technology area involving monetary transactions involves the need to use specific tools in payment verification processes. Digital Signature is a technology widely used in the cryptocurrency niche but is already used in other areas of human activity (law, information technology, healthcare).

In simple words, a Digital Signature is a digital alternative to a handwritten signature of a client or defendant in a transaction, which confirms the authenticity and validity of the payment or transaction itself. However, in contrast to the handwritten, even electronic version, a digital signature is fundamentally different in the complexity of key generation, which ensures the highest level of security for each owner of digital assets.

How is a digital signature formed?

Technically, a digital signature is a unique code that is attached to a document or message. This code proves that the transmitted data is not fake throughout the entire path from sender to recipient.

There are three sequential stages in the process of creating a digital signature:

  • data hashing, in which information is processed using a special algorithm, and the hash itself is generated;
  • signature - as soon as the hashing process is completed, the user must sign the payment or document being sent; at this stage, cryptographic mechanisms are applied;
  • verification - actions are performed by the recipient based on the private and public key by verifying the data, based on which conclusions are made about the signature's authenticity.

This generalized algorithm can be slightly modified depending on what kind of information is transmitted and in what ways.