Algorithms for Digital Signature defined

What Is a Digital Signature Algorithm?

A digital signature algorithm is a cryptographic method that uses a private key to "sign" and a public key to "verify" messages, proving both their origin and integrity. Think of it as placing a verifiable stamp on an electronic document—visible to all, but without hiding its contents.

A private key is a confidential, randomly generated number known only to its holder. The public key is derived from the private key and serves as a public identifier for signature verification. Digital signatures answer two fundamental questions: Who sent the message? Has it been tampered with in transit?

In blockchain, the "message" is often transaction data or authorization information. Nodes will only package your transaction into a block after verifying the signature with your public key.

How Do Digital Signature Algorithms Work?

The basic process of a digital signature algorithm involves generating a key pair, signing a message, and allowing others to verify the signature using the public key. The core principle: only the private key can sign, but anyone can verify.

1. Key Pair Generation: Your wallet creates a private key and computes the corresponding public key. You must securely store your private key or mnemonic phrase; the public key can be shared openly.
2. Signing the Message: Rather than signing the raw message directly, most systems first hash the message into a short digest, then use the private key to sign this digest. This enhances both efficiency and security.
3. Verification with Public Key: The verifier hashes the same message and uses your public key to check if the signature matches. If so, the message is confirmed as both "authentic" and "unaltered."

For example, ECDSA (Elliptic Curve Digital Signature Algorithm) uses a one-time random value in each signature. This random value must be unpredictable and never reused, as poor randomness can expose your private key.

Use Cases of Digital Signature Algorithms in Web3

Digital signature algorithms are essential for transaction confirmation, permission authorization, and message authentication in Web3. Without signatures, blockchain nodes cannot trust the source of transactions.

• Transactions: Public blockchains like Ethereum and Bitcoin require users to sign transaction data. Only after validating the signature do nodes broadcast and include transactions in blocks.
• Permissions: Many DeFi protocols require you to sign "permit" messages, authorizing smart contracts to spend your tokens—a digital equivalent of written consent.
• Practical Example: When you withdraw ETH from Gate, your external wallet signs the transaction with your private key. The network verifies it using your public key before processing it—demonstrating digital signatures in action.

Additionally, many exchange APIs require "signatures." For instance, Gate's API uses HMAC (Hash-based Message Authentication Code) for request signing. While HMAC also verifies source and integrity, it uses a shared secret instead of a public/private key pair.

Types of Digital Signature Algorithms

Common digital signature algorithms include RSA, ECDSA, Ed25519, and BLS, each differing in security, speed, signature size, and implementation complexity.

• RSA: A classic algorithm where signature length grows with key size (e.g., a 2048-bit RSA signature is about 256 bytes). It's widely used but produces larger signatures and offers moderate performance.
• ECDSA: Based on elliptic curves; signatures are typically 64–72 bytes (encoding-dependent). It's the main algorithm for Bitcoin and Ethereum transactions due to good performance and mature ecosystem support.
• Ed25519: Part of the EdDSA family; produces fixed 64-byte signatures, is fast, simple to implement, and deterministic (does not rely on external randomness). Widely used by Solana and Cardano.
• BLS: Supports efficient signature aggregation—combining multiple signatures into one to reduce on-chain verification costs. Ethereum’s consensus layer (validators) uses BLS12-381 for aggregated signatures.

How Are Digital Signatures Created and Verified in Wallets?

Most wallets automate digital signing using digital signature algorithms, but the process can be outlined in clear steps:

1. Create or Import Keys: You can create a new wallet (generating private/public keys) or import one using a mnemonic phrase—a human-readable form of your private key that should be stored offline.
2. Review Content to Be Signed: The wallet displays transaction details or authorization messages. You must confirm critical fields such as contract address, amount, permission scope, and chain ID.
3. Sign and Broadcast: After you approve, the wallet signs the message digest with your private key and sends both the original message and signature to the node or backend.
4. Verification and On-chain Inclusion: The network or application verifies your signature with your public key. If valid, the transaction enters the mempool for block inclusion; otherwise, it is rejected.

On Gate, on-chain withdrawals follow this signing and verification flow. For API requests (often using HMAC), strict server-side checks also ensure requests cannot be forged.

How Do Digital Signatures Relate to Hash Functions?

Digital signatures frequently work in tandem with hash functions. Hashing transforms data of any length into a fixed-size digest—a unique "fingerprint" for each file.

Signatures are typically applied to digests rather than raw messages for improved efficiency and reduced risk when handling large messages. If any part of the message changes, so does its digest—invalidating the signature.

Common hash functions include SHA-256 and Keccak-256. For example, Bitcoin uses double SHA-256 for transaction digests; Ethereum uses Keccak-256, often referred to as a SHA3 variant.

How Are Digital Signatures Different from Encryption Algorithms?

Digital signature algorithms are designed for "proof and integrity," while encryption algorithms focus on "confidentiality." Their objectives are distinct but often confused.

A digital signature does not hide content; it assures others that "this message was sent by me and hasn’t been altered." Encryption transforms content into ciphertext readable only by someone with the decryption key.

In practice, applications may use both: encrypted chat protects message privacy while digital signatures secure headers or critical fields for authenticity and integrity.

How Are Digital Signature Algorithms Chosen Across Blockchains?

The choice of digital signature algorithm depends on chain standards, ecosystem tools, and performance needs—each blockchain makes different trade-offs.

As of October 2024:

• Bitcoin uses ECDSA (secp256k1); since Taproot in 2021, Schnorr signatures have been introduced for better multisig and aggregation support, but ECDSA remains widely used.
• Ethereum uses ECDSA (secp256k1) for transactions; its consensus layer validators use BLS12-381 for aggregated signatures.
• Solana and Cardano use Ed25519 for high performance and deterministic signatures.
• Polkadot uses Sr25519 (a Schnorr variant).
• Cosmos chains mostly use secp256k1.

For scenarios demanding maximum throughput and simplicity, Ed25519 is common; for compatibility with Ethereum or Bitcoin ecosystems, ECDSA is preferred; for consensus or cross-chain use cases requiring aggregated signatures, BLS is ideal.

Signature size and verification costs also matter: RSA signatures are relatively large and slow—rarely used on-chain; Ed25519 has fixed 64-byte signatures with fast verification; BLS signatures in Ethereum’s consensus layer are 96 bytes compressed but can aggregate hundreds or thousands into one—minimizing overall verification cost.

Risks and Protections When Using Digital Signature Algorithms

The main risks in using digital signature algorithms are private key leakage and accidental authorization through unintended signing. Mitigation centers on secure key management and cautious signing practices.

• Private Key Leakage: Taking screenshots of mnemonic phrases, syncing them to cloud drives, or entering them online increases exposure risk. Use hardware wallets or cold storage for offline backup of mnemonics and enable multisignature protection where possible.
• Randomness Issues: Some algorithms (like ECDSA) require unique random values for each signature. Weak or reused randomness can compromise your private key. Use reputable wallets and libraries—never implement your own randomness.
• Unintended Authorization: Many "signature requests" don’t transfer funds but may grant contract permissions to spend your tokens. Always verify permission scope, target addresses, domains, and chain IDs; prioritize human-readable messages.
• Social Engineering & Phishing: Never sign messages on untrusted websites or connect your wallet blindly. Access apps only via official channels (such as Gate’s website or app) to reduce phishing risks.

Key Takeaways on Digital Signature Algorithms

Digital signature algorithms use private keys for signing and public keys for verification—solving "who sent this message" and "has it been changed" issues of trust. They work alongside hash functions (typically signing message digests) and differ from encryption by not hiding content. Most blockchain transactions rely on ECDSA or Ed25519; consensus mechanisms and cross-chain protocols often utilize BLS aggregation. In practice, focus on private key security, message clarity, and randomness quality; on platforms like Gate, digital signatures are fundamental for network acceptance of transactions. Algorithm choice depends on chain standards, performance requirements, and ecosystem compatibility—the ultimate goal is reliable proof of identity and data integrity.

FAQ

What Is the Difference Between a Digital Signature and a Digital Certificate?

A digital signature uses your private key to cryptographically authenticate data—proving you control that private key. A digital certificate is a trusted file containing your public key information issued by a third-party authority. In simple terms: a digital signature is like your handwritten signature; a certificate is like your ID card. In blockchain wallets, signatures authorize transactions while certificates validate identity or publish information.

What Happens If a Signature Fails Verification or Is Tampered With?

If a signature is altered during transmission, validators will immediately detect this and reject the transaction or message. Blockchain networks automatically discard invalid transactions to ensure security. This is one of the greatest strengths of digital signatures—even a single character change causes verification failure.

Is a Digital Signature Still Secure If My Private Key Is Leaked?

No—it is not secure. If your private key leaks, others can sign as you—effectively impersonating your identity. Protecting your private key is critical: use hardware wallets, never share keys online, regularly monitor account activity. If you suspect exposure, move assets to a new wallet immediately.

Why Do Some Platforms Require Signature-Based Login Instead of Passwords?

Signature-based login is more secure than passwords—passwords are vulnerable to brute-force attacks or phishing scams. Signing requires you to possess your private key locally; no third party ever sees it. Platforms like Gate offer signature-based login so you can prove identity without submitting a password—the private key always remains under your control.

Is There Any Difference Between Signing with Mobile Wallets Versus Desktop Wallets?

The underlying cryptography is identical across devices—both follow the same standards. The main differences are convenience versus security: mobile wallets are more portable but potentially exposed to greater risks; desktop wallets offer richer features but may have higher usage barriers. Hardware wallets (cold storage wallets) operate offline during signing—delivering maximum security. Choose based on usage frequency and asset value.