Digital Signature

Under the hood, a digital signature is produced by an algorithm that combines a signer's private key with the data being signed, typically a compressed hash of the transaction rather than the raw message itself. The output is a pair of numbers that anyone holding the corresponding public key can check against the original data, without ever seeing the private key. If even a single byte of the signed data changes, the signature no longer validates, which is what gives blockchains their tamper-evidence.

Most blockchains rely on elliptic curve schemes rather than older systems like RSA, because they offer equivalent security with much smaller keys and faster verification, both important when thousands of signatures need checking per block. Bitcoin and Ethereum originally standardized on ECDSA over the secp256k1 curve. Bitcoin's 2021 Taproot upgrade added support for Schnorr signatures, which are linear and can be aggregated, letting multiple signers combine their signatures into one compact signature so a multisignature spend looks the same on-chain as a regular one. Other networks use variants such as EdDSA for faster, side-channel-resistant signing.

Beyond authorizing spends, digital signatures underpin message signing for wallet logins, off-chain approvals, and smart contract permits. Their main weakness is key management: lose or leak the private key and anyone can forge a valid signature, and today's elliptic curve schemes are also considered vulnerable to sufficiently powerful future quantum computers, which is driving research into post-quantum signature alternatives.