Digital Signature Algorithm
A digital signature algorithm is a mathematical scheme used to demonstrate the authenticity of digital messages or documents. It provides a way to verify that a transaction was created by the owner of the private key and has not been altered in transit.
When you send cryptocurrency, you sign the transaction with your private key; the network uses the corresponding public key to verify that the signature is valid. This process is the core of non-repudiation in financial transactions.
Once a transaction is signed and broadcast, the sender cannot deny having initiated it. This is critical for derivatives contracts, where legal and financial obligations must be strictly enforced.
It ensures that the order flow is legitimate and prevents unauthorized parties from executing trades on behalf of others.