What is a Digital Signature?
Digital signature is an encrypted mechanism used to verify the authenticity and integrity of digital data. We can think of it as a digital version of common handwritten signatures, but with higher levels of complexity and security.
In short, we can describe a digital signature as a code that is attached to a message or document. Once generated, the code acts as proof that the message has not been tampered with along the way from sender to recipient.
While the concept of securing communications using cryptography goes back to ancient times, digital signature systems became a possible reality in the 70s — thanks to the development of public-key cryptography (PKC). Therefore, to learn how digital signatures work, we first need to understand the basics of hashing functions and Public Key Cryptography.
Hash functions are one of the main elements of digital signature systems. Hashing processing involves changing data of any size into fixed-size data. This is done by a special kind of algorithm known as hash functions. The outputs generated by a hash function are known as hash values.
When combined with cryptography, so-called cryptographic hash functions can be used to generate a hash value that acts as a unique fingerprint.
This means that any change to the input data (message) would result in a completely different hash. This is why cryptographic hash functions are widely used to verify the authenticity of digital data.
Public Key Encryption (PKC)
Public-key cryptography, or PKC, refers to a cryptographic system that uses a pair of keys: a public key and a private key. The two keys are mathematically related and can be used for both data encryption and digital signatures.
As an encryption tool, the PKC system is more secure than the most rudimentary methods of symmetric encryption. While older systems rely on the same key to encrypt and decrypt information, PKC allows data to be encrypted with the public key and decrypted with the corresponding private key.
Furthermore, the PKC scheme can also be applied for the generation of digital signatures. The process consists of submitting a message (or digital data), along with the sender's private key, through a function hash.
Then the message recipient can verify that the signature is valid using the public key provided by the sender.
In some situations, digital signatures can involve encryption, but this is not always the case. For example, the block chain do Bitcoin uses digital signatures and PKC, but contrary to what many people think, there is no encryption in the process. Technically, the Bitcoin implements the so-called Elliptic Curve Digital Signature Algorithm (ECDSA) to authenticate transactions.
How Digital Signatures Work
In the context of Cryptocurrencies, a digital signature system generally consists of three basic steps: hashing, signing, and verification.
The first step is to hash the message or digital data. This is done by a hash algorithm, which changes the data into a hash value. As mentioned, messages can vary significantly in size, but when they are subjected to the hash process, all generated values (hash values) are the same size. This is the primary property of a hash function.
However, hashing the data is not mandatory to produce a digital signature, as it is possible to use a private key to sign an unhashed message. However, in the case of cryptographic coins, messages are always transformed into hashes, as the fixed size of the hash values facilitates the whole process.
Once the information has been transformed into hash values, the message sender must sign it. This is when Public Key Cryptography comes into play. There are several types of digital signature algorithms, each with its own mechanism. But usually the message will be signed with a private key and the recipient of the message will be able to check its validity using the corresponding public key (provided by the sender).
In fact, if the private key is not included when the signature is generated, the message recipient will not be able to use the corresponding public key to verify the validity of the signature and message. Public and private keys are generated by the message sender, but only the public key is shared with the receiver.
It is noteworthy that digital signatures are directly related to the content of each message. Consequently, unlike handwritten signatures, which tend to be the same so as not to depend on the message, each digitally signed message will have a different digital signature.
Let's use an example to illustrate the entire process right through to the final step of verification. Imagine that Mary wrote a message to John, generated a hash value from the message, and combined it with her private key to generate a digital signature. The signature will act as a unique fingerprint, unique to that message.
When John receives the message, he can check the validity of the digital signature using the public key provided by Mary. This way, John can be sure that the signature was created by Mary because only she has the private key that corresponds to this public key (at least we hope so).
Therefore, it is crucial that Maria keep her private key secret. If someone else takes possession of Maria's private key, they can create fake digital signatures in Maria's name. In the context of Bitcoin, this means that someone could use Maria's private key to move or spend her Bitcoins without her permission.
Why are Digital Signatures Important?
Digital signatures are often used to achieve three outcomes: data integrity, authentication, and non-repudiation.
Data integrity. John can see that Mary's message has not changed along the way. Any change to the message would produce an entirely different signature.
Authenticity. As long as Mary's private key is kept secret, John can use his public key to confirm that the digital signatures were created by Mary and no one else.
non-repudiation. Once a signature is generated, Maria cannot deny that she signed it in the future unless her private key is compromised in some way.
Digital signatures can be applied to many types of digital documents and certificates. So they have many possible applications. Some of the most common use cases include:
Information Technology. To improve the security of Internet communication systems.
Finances. Digital signatures can be made effective on audits, expense reports, loan agreements and more.
Legal. Digital signatures for all types of commercial contracts and legal agreements, including government documents.
Health. Digital signatures can prevent fraud in prescription drugs and medical records.
Block. Digital signature schemes ensure that only legitimate owners of digital currency can sign a transaction to move money (as long as their private keys are not compromised).
The main challenges faced by digital signature schemes are related to at least three factors:
Algorithm. The quality of the algorithms employed in a digital signature scheme is critical. This includes choosing reliable hash functions and strong encryption systems.
Implementation. Even if the algorithms are good, poor implementation is likely to cause the digital signature system to fail.
private key. If private keys are compromised in any way, the authenticity and non-repudiation properties will be invalidated. For Cryptocurrency users, the loss of a private key can result in significant financial losses.
Electronic Signatures vs. Digital Signatures
In short, digital signatures refer to a specific type of electronic signature — which refers to any electronic method of signing documents and messages. Therefore, all digital signatures are electronic signatures, but the reverse is not always true.
The main difference between the two systems is the mechanism of authentication. Digital signatures use cryptographic systems such as hash functions, public key cryptography, and cryptographic techniques.
Hash functions and the PKC system are crucial elements in digital signature schemes, which are now applied in a wide variety of situations. If implemented correctly, digital signatures can enhance security, ensure integrity, and facilitate authentication of all types of digital data.
In the blockchain world, digital signatures are used to sign and authorize transactions in digital currency. They are particularly important for Bitcoin because signatures ensure that coins can only be used by individuals who have the corresponding private keys.
Although we've been using electronic and digital signatures for years, there's still plenty of room for growth. A large part of today's bureaucracy is still paper-based, but we will likely see more adoption of digital signature schemes as we move to a more digitized system.
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