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Thursday, December 9, 2021

Notes Related to Bitcoin and Digital Signing

This is the way I see the Bitcoin process of unlocking bitcoins from an address.
First of all, a private key creates a public key, which eventually becomes an address.
For conceptualizing the digital signing verification that unlocks bitcoins in a transaction, I will just reference the public key.
  • 1. hashAlgo(BTCtransaction, public key) = hashedOutput
  • 2. onewaysSignAlgo(BTCtransaction, private key) = signature
  • 3. verifyAlgo(signature, public key) = hashedOutput
  • The private key never revealed, but if the hashed message from 1 and 2 are equal, then it is confirmed that only the person that had the private key from which the public key was derived could have created the signature.
    I know it is much more complicated than just comparing the output from 1 and 2.
    More about digital signing or Elliptical Curve Digital Signing Algorithm:
    You shouldn't confuse ECDSA with AES (Advanced Encryption Standard) which is to encrypt the data. ECDSA does not encrypt or prevent someone from seeing or accessing your data, what it protects against though is making sure that the data was not tampered with.
    Source: https://www.instructables.com/Understanding-how-ECDSA-protects-your-data/

    It is important to not confuse this process with encrypting data as in Pretty Good Privacy (PGP).

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