What is a digital signature?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 5 min
In short
A digital signature proves that a transaction came from the holder of a private key, without ever revealing that key. Because a blockchain has no administrator, the validity of a transfer rests entirely on verifying this signature. Whoever can produce the signature is, in practice, the owner.
Key points
- Created with a private key, verifiable by anyone
- Alter one byte of the transaction and it fails
- The ability to sign is what ownership means here
- Always read what a signing prompt actually says
Definition
A value computed from transaction data and a private key that anyone can verify with the matching public key, proving both authorship and that the data has not been altered.
There are three steps. The transaction is hashed to a fixed-length digest, the signature is computed from that digest and the private key, and verifiers check the signature against the digest and the public key. The private key is never used during verification, so publishing a signature reveals nothing about it.
A signature is bound to the exact data it covers. Change an amount from 0.1 BTC to 1 BTC and the digest changes, so verification fails. There is no way for a relaying node to quietly swap a destination address partway through.
In practice the risk is not the algorithm but what you are asked to sign. A DeFi approval or an NFT marketplace order looks nothing like a transfer, yet it grants the power to move your assets. Approving without reading the contract and permissions your wallet displays is how people lose funds days later.
Watch out for
- · Approving a prompt unread can hand over unlimited withdrawal rights
- · 'It's only a signature, not a transfer' is false — approvals move funds
- · Any prompt asking you to type a key or seed phrase is fraud; real signing happens inside the wallet