Digital signatures in blockchain

Digital signatures are a product of asymmetric key cryptography, and they are a great way of establishing trust between parties in a trustless environment. As mentioned at the beginning of this chapter, digital signatures are used in the application layer of the blockchain. They are mostly used to validate the events in transactions that are inserted in the blocks. They are used to validate the transactions, since verification can be performed by anyone who possesses the public key of the generated public-private key pair.

The asymmetric key cryptography provides a way to identify an entity. Anyone can prove the identity by owning the private key. Creating an identity for the participants allows them to perform operations such as asset management. We will explore digital identity and asset management in depth in this section in order to understand the role of digital signatures in blockchain.