Unit 3: Signatures and Transactions
Cryptographic signatures are fundamental to preventing fraud in Bitcoin transactions. Without them, people on the network could spend Bitcoins that are not theirs.
In this unit, you'll learn what cryptographic signatures are, what is needed to create and validate a signature, how to sign and validate data using public and private keys, and how Bitcoin transactions use signatures to prevent fraud on the network.
Completing this unit should take you approximately 1 hour.
Upon successful completion of this unit, you will be able to:
- summarize the security benefits of cryptographic signatures;
- identify the components needed to create and validate a signature;
- explain how signatures are used in Bitcoin transactions; and
- sign data and validate signatures cryptographically.
- summarize the security benefits of cryptographic signatures;
3.1: What is a Digital Signature?
We have already covered the basics of digital signatures, so it's time to dive into the specifics of the digital signatures used in Bitcoin. This video explains how Elliptic curve cryptography is used to sign data so that the origin of the signature can be validated, but the private key used to create the signature can not be discovered.
3.2: Exercise: Sign and Validate Data
Let's put your new knowledge of cryptographic signatures to use by signing a message and validating it! This exercise will walk you through the process, allowing you to get more familiar with what is needed to create and validate a digital signature.
3.3: Introduction to Bitcoin Transactions
To understand why digital signatures are integral to Bitcoin transactions, you'll need to learn a bit about the structure of Bitcoin transactions. This chapter will introduce you to what's happening "Behind the Scenes" in these transactions. We'll discuss this more in Unit 5.
3.4: How Bitcoin Transactions Use Signatures
Let's dig into when, where, and how Bitcoin uses Elliptic curve signatures in transactions. This chapter covers the importance of signatures to transactions, the three purposes these signatures serve, and how they are applied.
This video walks through the locking and unlocking of transactions and how signatures play a role, specifically in a type of Bitcoin transaction called Pay to Public Key Hash or P2PkH. In addition, the video covers when, how, and by whom these unlocking scripts and signatures are validated. Watch from the start to 9:15.