Blockchain technology has grown exponentially in recent years due to its various properties like security, scalability, transparency, immutability, etc. So cryptography in digital signatures does the same thing. So in order to get the best result we used a combination of both in securing the blockchain technology. Let’s understand the terminology associated with blockchain and digital signatures.
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What is a digital signature in blockchain technology?
A digital signature is a cryptography technique used to validate the authenticity and integrity of transactions in other words, we can say messages or documents between two parties to verify that an authorized person originally signed it and there is no alteration during transmission. Digital signature works on 3 principles i.e. Hashing, Signing, Verification.
Hashing: When a sender wants to sign a document, A sender needs to generate a hash of the documents using a hashing algorithm in a cryptography hash function. An output in the form of a fixed-size string which is a combination of characters also known as hash value or digest. This hash is the unique value and can’t be reversed. After this process sender encrypts this hash value with his private key, at the end this encrypted hash plus md5 or sha256 generates a digital signature.
Verification: when the document and digital signature are received by the receiver, the recipient decrypts the signature with the help of the sender’s public key in order to get the original hash value. The recipient performs the same operation that the sender has performed while encrypting the document. If the hash values match after the result it’s proved that authenticity is maintained and the document is the same as the original.
Concept in digital signature
Public key cryptography: This technique or encryption method uses two key pairs, one for encryption and one decryption key also called public key and private key respectively. The asymmetric key algorithm generates a key pair which includes a private key and a unique public key. It is also known as public-key encryption. Asymmetric key cryptography is highly scalable. In Asymmetric key cryptography, the key exchange process is quite simple, here one member produces a secret key and encrypts it with the public key of the receiver then the receiver easily decrypts it with their private key for the establishment of a secure connection.
Hash Functions: Cryptography hashing is also a technique for secure communication and it ensures that what data is transferred from the sender and the receivers exactly receive the same data without any modification; it’s called the immutability property of cryptography. Hashing does not involve the use of keys. When a transaction is verified the hashing algorithm adds blocks to the blockchain with the previous block connected to the hash. The hashing structure is also called a link list in data structure. The first hash is called the root hash. The hash function helps in maintaining the integrity of blocks in blockchain and it uses MD5 and SHA.
Certificate Authority: certificate authority has the power to generate valid certificates plus digital signatures also known as(CAs),
Digital Signatures in Blockchain Technology
Blockchain technology is a distributed ledger system that maintains a secure and immutable record of transactions. Digital signatures are building blocks of blockchain systems that are linked with hash in a linear way.
Data integrity: In the blockchain ledger every block is secured and connected by its previous hash value up to the last block by creating a chain of n numbers of blocks. Block header contains the hash of the previous block and the current block hash. When a new block is added the the chain nodes verify its digital signature and hash value to the previous block and check the authenticity of the block after confirmation only that block is validated and added to the ledger, otherwise, its discarded from the blockchain.
Consensus mechanism: Proof of work and proof of stake are two main algorithms used in public blockchain in order to verify the transaction. In pow, miners try to solve the mathematical problem also called nonce in order to verify the block by systems. The proof of work system works on the majority of transactions in order to validate the blocks. Proof of stake works on the principle of staking the miner who has a major stake has more power so they will validate the signature of the block and add it to the ledger.
Smart contract: Smart contracts are self-execution functions that will get automatically when certain conditions are met due to their logical nature.
When deploying smart contact it is signed by the deployer’s wallet private key. This is the method for verifying the authenticity of smart contracts creator. So when conditions written in smart contract logic are met it will get executed automatically without triggering.
Advantage of digital signature in blockchain
Digital currencies like Bitcoin utilize encryption to secure transactions and prevent fraud. Complex algorithms and cryptographic keys safeguard these transactions, making it highly challenging to tamper with or counterfeit them.
Cryptography is utilized to provide web browsing security, safeguarding users against eavesdropping and man-in-the-middle attacks. The Secure Sockets Layer (SSL) and Transport Layer Security (TLS) protocols employ public key cryptography to encrypt data exchanged between the web server and the client, establishing a secure communication channel.
Authentication protocols make extensive use of cryptographic techniques to verify a user’s identity and ensure they have the necessary access privileges for resources. Additionally, the storage and verification of electronic signatures are reliant on cryptography for security.
Cryptography also plays a vital role in securing two-way communications such as video chats, instant messages, and email. Even with basic encryption, messages are guaranteed to be viewed only by the intended recipients. End-to-end encryption offers a high level of protection and privacy for consumers and is frequently employed in messaging apps such as WhatsApp and Signal.
Digital signatures are broadly utilized in economic transactions, along with cryptocurrencies and digital payments. Blockchain generation guarantees stable and obvious transactions, decreasing the threat of fraud and improving economic inclusion.
Blockchain generation, blended with virtual signatures, is used to song and affirm the authenticity of products in delivery chains. This guarantees that merchandise is actual and features now no longer being tampered with, improving transparency and accountability.
Digital signatures are utilized in identification verification structures to authenticate and affirm the identification of individuals. Blockchain generation gives a stable and immutable document of identification-associated transactions, decreasing the threat of identification robbery and fraud.
Smart contracts, powered via means of virtual signatures, are used to automate and put in force prison agreements. Blockchain generation guarantees that the phrases of the settlement are finished as agreed, offering a stable and obvious mechanism for settlement management