What Is a Digital Signature? How Crypto Transactions Are Authorised

What a signature proves

When you send crypto, nobody asks for a password. Instead, your wallet creates a digital signature over the transaction using your private key. The network checks the signature against your public key. If it matches, the transaction is accepted as authorised by whoever controls the key. The key itself is never revealed.

How it works in principle

Public-key cryptography uses a pair of linked keys. The private key is secret, and the public key can be shared. To sign, the wallet runs the transaction data and the private key through a signing algorithm. To verify, a node runs the data, the signature and the public key through a verification algorithm, which returns yes or no. Forging a valid signature without the private key is computationally infeasible.

Why message binding matters

A signature covers a particular message. If an attacker changes the amount or destination, the signature no longer verifies, so the network rejects it. That is why a transaction cannot be edited after you sign it, and why you must review the details before approving. The Bitcoin developer reference describes how signature hash types choose which parts of a transaction a signature covers.

What it means in practice

Treat anything that asks you to sign as a request to authorise something. Signing a malicious transaction or message can transfer your coins just as sending would. Never sign data you do not understand, and be wary of sites asking you to sign blind. Your wallet's confirmation screen is the place to check the real details.