⛓️ Digital Signatures in Bitcoin & Ethereum
See how every blockchain transaction is signed and verified
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Signature Algorithms
🌐 Blockchain Applications
Digital signatures are the foundation of all blockchain operations: transactions, smart contracts, identity, and multi-signature wallets. Let's explore real-world use cases.
🎮 Interactive: Explore Applications
Select a use case to see how digital signatures enable secure blockchain operations
💸
Transaction Signing
Every blockchain transaction must be digitally signed to prove ownership and authorization
Example: Alice sends 0.5 BTC to Bob
1
Alice creates transaction: "Send 0.5 BTC from address A to address B"
2
Alice signs transaction hash with her private key
3
Transaction + signature broadcast to network
4
Miners verify signature using Alice's public key (derived from address A)
5
If valid, transaction included in block
~300,000
Bitcoin Txs/Day
All signed with ECDSA
~1.2M
Ethereum Txs/Day
All signed with ECDSA
<0.01%
Invalid Signatures
Rejected by nodes
🛡️ Security
Without valid signature, transaction is rejected. Can't spend someone else's coins without their private key.
🌍 Real-World Impact
In 2023, over 110 million Bitcoin transactions were secured by digital signatures. Not a single transaction was forged.
📊 Signature Usage by Numbers
₿
Bitcoin
300K+ transactions/day
800M+ total transactions since 2009
100% signed with ECDSA (secp256k1)
$500B+ market cap secured
Ξ
Ethereum
1.2M+ transactions/day
2B+ total transactions
100% signed with ECDSA (secp256k1)
$200B+ market cap + $50B DeFi TVL
🦄
DeFi
$1B+ daily Uniswap volume
10M+ unique DeFi users
Every swap requires 2-3 signatures
$50B+ total value locked
🖼️
NFTs
$20B+ annual NFT sales
100M+ NFTs minted
Every mint/transfer digitally signed
OpenSea, Blur process millions of sigs/day
🔍 How Nodes Verify Signatures
1. Transaction Received
Node receives transaction from network: message + signature + public key (or address)
TX: {from: 0x1234..., to: 0x5678..., value: 1 ETH, sig: 0xabcd...}
2. Signature Verification
Node runs ECDSA verification algorithm using public key and signature
verify(message_hash, signature, public_key) → true/false
3. Accept or Reject
✅ Valid signature → Transaction accepted, added to mempool
❌ Invalid signature → Transaction rejected, dropped immediately
❌ Invalid signature → Transaction rejected, dropped immediately
Result: Invalid signatures never make it into blocks. Every transaction in every block has a cryptographically valid signature.
⚠️ What Happens Without Signatures?
❌ No Authentication
Anyone could create transactions spending anyone else's coins. "Alice sends Bob 100 BTC" could be forged by Carol.
❌ No Non-Repudiation
Alice could claim "I never authorized that payment!" with no way to prove she did. Disputes impossible to resolve.
❌ No Trust Minimization
Would need central authority to approve transactions (like banks). Defeats entire purpose of blockchain decentralization.
✅ Key Insights
- ✓Every blockchain operation requires digital signatures - transactions, smart contracts, authentication
- ✓Billions in daily volume secured: Bitcoin $10B+, Ethereum $20B+, DeFi $1B+ - all signature-verified
- ✓Multisig wallets use threshold signatures to protect DAO treasuries ($50B+ in Gnosis Safe)
- ✓Sign-in with Ethereum enables passwordless Web3 authentication using signature challenges