Digital Signature

A digital signature is a cryptographic mechanism that proves a piece of data (such as a transaction) was authorized by a specific party and has not been altered. It is the blockchain equivalent of a handwritten signature — but mathematically unforgeable.

How it works

1. The sender creates a hash of the transaction data
2. The hash is encrypted with the sender's private key — this is the signature
3. The signature is attached to the transaction and broadcast
4. Anyone can verify the signature using the sender's public key, confirming:
   • The transaction was signed by the private key owner
   • The data has not been modified since signing

Transaction data  →  Hash  →  [Sign with private key]  →  Digital signature
Signature + data  →  [Verify with public key]  →  Valid / Invalid

Why it matters in blockchain

Every transaction on Bitcoin, Ethereum, and virtually all blockchains is protected by a digital signature. Without a valid signature:

• The network rejects the transaction
• No one can spend funds from an address they don't control

This is what makes "not your keys, not your coins" true — only the private key holder can produce a valid signature for that address.

See also

• Private key
• Cryptography
• Address
• Blockchain