What is a digital signature?

How does a crypto network know that you approved a transfer and not someone who simply copied your address? Your wallet creates a digital signature, using your private key and the data to be signed.

Think of a seal that changes depending on the document’s contents. If someone changes the recipient or the amount in a signed transaction, the existing signature won’t verify for the new data. Unlike a photo of your handwritten signature, it can’t be copied as is onto any other text and stay valid.

Verification is done with the corresponding public key. This way, the network’s nodes can check the signature without learning the private key. The signature doesn’t encrypt the contents: a signed transaction can be publicly visible.

Why it matters

In crypto, digital signatures make it possible to approve transactions without a clerk having to check your identity. They prove that the right key was used, not, on their own, the holder’s name or intent. If someone steals the key, they can also create valid signatures.

We don’t only sign transfers. A wallet can sign a message to log in to a decentralized application or to grant a specific permission. Also, a valid signature doesn’t mean the transaction has already been included in the blockchain or that it meets all the network’s other rules.

What to watch out for

The “Sign” button isn’t always a harmless login confirmation. Some signed messages can allow tokens to be moved, even if you aren’t paying a network fee at that moment. We insist on checking the contents and the app requesting the signature, not just how the website looks.

A hardware wallet protects the key from direct exposure on your computer, but it doesn’t make a malicious authorization that you approve safe. To sign through your wallet, you never need to hand over your private key or seed phrase (recovery phrase) to any website.