Mastering Bitcoin, 3rd Edition

Chapter 8. Digital Signatures

Two signature algorithms are currently used in Bitcoin, the schnorr signature algorithm and the Elliptic Curve Digital Signature Algorithm (ECDSA). These algorithms are used for digital signatures based on elliptic curve private/public key pairs, as described in “Elliptic Curve Cryptography Explained”. They are used for spending segwit v0 P2WPKH outputs, segwit v1 P2TR keypath spending, and by the script functions OP_CHECKSIG, OP_CHECKSIGVERIFY, OP_CHECKMULTISIG, OP_CHECKMULTISIGVERIFY, and OP_CHECKSIGADD. Any time one of those is executed, a signature must be provided.

A digital signature serves three purposes in Bitcoin. First, the signature proves that the controller of a private key, who is by implication the owner of the funds, has authorized the spending of those funds. Secondly, the proof of authorization is undeniable (nonrepudiation). Thirdly, that the authorized transaction cannot be changed by unauthenticated third parties—​that its integrity is intact.

Note

Each transaction input and any signatures it may contain is completely independent of any other input or signature. Multiple parties can collaborate to construct transactions and sign only one input each. Several protocols use this fact to create multiparty transactions for privacy.

In this chapter we look at how digital signatures work and how they can present proof of control of a private key without revealing that private key.

How Digital Signatures Work

A digital signature consists ...