How to Create a Digital Signature for Crypto Transactions

How to Create a Digital Signature for Crypto Transactions
Selene Marwood / Dec, 9 2025 / Crypto Security

Digital Signature Validator

Enter your transaction details to verify if your digital signature is valid. This tool checks the ECDSA signature against the transaction hash and public key to ensure:

  • The signature follows the low-S rule (s < n/2)
  • The signature format is DER-encoded
  • The hash matches the transaction
  • The signature verifies against the public key

Every time you send Bitcoin, Ethereum, or any other cryptocurrency, you’re not just clicking a button-you’re using a digital signature to prove you own the funds. No bank, no middleman, no password reset. Just math. And if you get it wrong, your coins are gone forever.

This isn’t theory. In 2013, thousands of Android Bitcoin wallets got hacked because their random number generator was broken. The same flaw that let hackers crack Sony’s PlayStation 3 in 2010. One bad line of code, and your private key was exposed. That’s why understanding how digital signatures work isn’t optional-it’s survival.

What Exactly Is a Digital Signature in Crypto?

A digital signature is a cryptographic proof that you, and only you, authorized a transaction. It doesn’t reveal your private key. It doesn’t even show your public key directly. It just says: “I have the secret that matches this public address, and I’m signing this exact transaction.”

Bitcoin and most other blockchains use ECDSA-Elliptic Curve Digital Signature Algorithm-on a curve called secp256k1. It was chosen because it’s fast, secure, and produces small signatures. A typical ECDSA signature is about 72 bytes. Compare that to RSA, which needs 256 bytes for the same security level. On a blockchain where every byte costs money, that matters.

Here’s the core idea: your private key is a random 256-bit number. Your public key is a point on an elliptic curve, calculated by multiplying that number with a fixed generator point G. The signature proves you know the private key without ever showing it. That’s the magic.

The Four Steps to Create a Digital Signature

Creating a valid signature isn’t complicated, but it’s unforgiving. One mistake, and your transaction gets rejected-or worse, your funds are stolen. Here’s exactly how it works:

  1. Hash the transaction - All the details of your transaction (who’s sending, who’s receiving, how much, the inputs, the timestamp) are combined into one string and run through SHA-256 twice. This creates a fixed 256-bit hash. In Bitcoin, this is called the “preimage.” If even one bit changes in the transaction, the hash becomes completely different. This ensures the signature is tied to this exact transaction and can’t be reused.
  2. Generate a cryptographically secure random number - You need a new, unpredictable number called k for every signature. This isn’t just any random number. It has to come from a cryptographically secure source, like RFC 6979, which turns your private key and the transaction hash into a deterministic, but still secure, k-value. If you reuse k (like Sony did), your private key is exposed. If you use a weak RNG (like Android wallets in 2013), hackers can crack it.
  3. Calculate the signature components r and s - Using the elliptic curve math, you compute two values: r (the x-coordinate of k×G) and s (calculated as s = k⁻¹ × (hash + r × private_key) mod n). The number n is the curve order-a huge fixed value. The value of s must be less than half of n (s < n/2). This is called the “low-S” rule, enforced by BIP 62. If s is too high, miners will reject your transaction.
  4. Encode it in DER format - The r and s values are packed into a specific binary structure called DER (Distinguished Encoding Rules). It looks like this: 30 + length + 02 + length of r + r + 02 + length of s + s + sighash byte. The sighash byte (usually 0x01 for SIGHASH_ALL) tells the network which parts of the transaction are signed. Get this wrong, and your signature won’t verify.

That’s it. Four steps. But every single one has to be perfect.

Why You Should Never Build Your Own Signature Code

Most developers think they can write their own ECDSA implementation. They can’t. Not safely.

Dr. Matthew Green from Johns Hopkins University says 98% of custom ECDSA implementations have critical flaws. In 2016, Bitcoin Gold suffered a $18 million double-spend attack because someone messed up signature validation. In 2018, MyEtherWallet had a phishing vulnerability caused by improper signature handling-315 users lost over 1,000 ETH.

Even big teams mess up. In 2021, Chainalysis analyzed 214 GitHub issues from crypto devs. 78% struggled with DER encoding. 63% didn’t hash the transaction correctly. 41% didn’t handle the low-S requirement.

You don’t need to be a cryptographer to use digital signatures. You just need to use the right tools.

An engineer turns a brass gear that generates a secure random number, releasing starlight that forms a signature.

Use Proven Libraries-Not DIY Code

There are only three safe paths:

  • libsecp256k1 - The official library used by Bitcoin Core since 2015. It’s fast, audited, and battle-tested. Used by hardware wallets like Ledger and Trezor.
  • BitcoinJS - A JavaScript library used by hundreds of web wallets. Over 1.2 million downloads per month. One developer on GitHub said: “After three days of failing to implement ECDSA manually, BitcoinJS got it working in 20 minutes.”
  • Web3.py or ethers.js - For Ethereum, these handle signing automatically. You just pass your private key and transaction object.

These libraries handle everything: secure random number generation, DER encoding, low-S checks, sighash flags. They’ve been audited by firms like Trail of Bits and OpenZeppelin. They’ve seen real-world attacks. They’ve been patched.

If you’re building a wallet, use one of these. If you’re learning, study their code-but don’t copy it into production.

What Happens After You Sign?

Once you’ve created the signature, you attach it to your transaction and broadcast it to the network. Nodes verify it by:

  • Recomputing the transaction hash
  • Using your public key (which is derived from your address) to check if the signature matches
  • Confirming the signature is in DER format and follows low-S rules

If all checks pass, the transaction is added to the mempool. Miners include it in a block. You’re done.

There’s no confirmation from a server. No email. No “signature approved.” The blockchain either accepts it or rejects it. No exceptions.

Spirit creatures weave transaction hashes into a glowing Schnorr signature tree with code roots and glowing symbols.

The Future: Schnorr and Beyond

ECDSA has served crypto well since 2009. But it’s not perfect. It’s vulnerable to signature malleability-where someone can tweak a signature and still make it valid. That’s how Mt. Gox lost $460 million in 2014.

Bitcoin’s Taproot upgrade in November 2021 introduced Schnorr signatures. They’re linear, meaning multiple signatures can be combined into one. A 2-of-3 multisig that used to be 226 bytes is now 170 bytes. That saves space, lowers fees, and improves privacy.

Ethereum is testing ECDSA with secp256r1 (EIP-2537) for better hardware wallet support. Other chains like Cardano and Stellar already use EdDSA, which is faster and simpler.

But the core idea stays the same: sign the hash with your private key. The algorithm might change. The curve might change. The encoding might change. But the principle? That’s eternal.

What You Should Do Right Now

If you’re just using crypto: trust your wallet. Don’t touch private keys unless you know what you’re doing.

If you’re a developer: use BitcoinJS, libsecp256k1, or ethers.js. Read BIP 62 and BIP 143. Test your code on testnet. Don’t assume your random number generator is secure-use RFC 6979.

If you’re learning: implement ECDSA once. Just to understand it. Use Python and the ecdsa library. Sign a fake transaction. Break it. Fix it. Then delete the code. Never use it in production.

Digital signatures are the bedrock of crypto. They’re what make decentralization possible. They’re not magic. They’re math. And math doesn’t forgive mistakes.

Can I create a digital signature without a private key?

No. A digital signature requires your private key. Without it, you can’t prove ownership of the funds. Anyone claiming they can sign for you without your private key is trying to steal your crypto.

Why does my transaction get rejected after I sign it?

Most common reasons: incorrect transaction hash, wrong sighash flag, s-value too high (not following low-S rule), or malformed DER encoding. Always use a trusted library to avoid these issues.

Is ECDSA secure against quantum computers?

No. ECDSA can be broken by a sufficiently powerful quantum computer using Shor’s algorithm. But current quantum computers (like IBM’s 127-qubit Eagle) aren’t close to breaking it. NIST estimates ECDSA will remain secure for at least 15 years. Future upgrades will likely use post-quantum algorithms, but for now, ECDSA is still safe.

What’s the difference between a public key and a digital signature?

Your public key is like your crypto address-it’s shared openly. A digital signature is a one-time proof that you own the private key matching that public key. The signature changes with every transaction. The public key stays the same.

Can I reuse the same signature for multiple transactions?

No. Each signature is tied to a specific transaction hash. Reusing a signature won’t work-it will be rejected by the network. Even if you try to copy a signature from one transaction to another, the hash won’t match, and verification will fail.

15 Comments

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    Lois Glavin

    December 10, 2025 AT 10:19

    Really clear breakdown. I used to think digital signatures were some kind of magic spell, but now I get it - it’s just math holding everything together. No wonder people lose coins when they mess with the random number generator. Learned something today.

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    Abhishek Bansal

    December 12, 2025 AT 07:00

    LOL you people act like ECDSA is sacred. It’s a 15-year-old algorithm with known flaws. If you’re still using it in 2024, you’re not secure - you’re just lazy.

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    Bridget Suhr

    December 13, 2025 AT 14:46

    Wait, so if you reuse k, your private key gets leaked? That’s wild. I thought it was just a one-time thing, but now I get why they stress RFC 6979 so much. Also, low-S rule? I had no idea. Thanks for the clarity!

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    Jessica Petry

    December 15, 2025 AT 03:32

    How quaint. You assume everyone cares about ECDSA. Most real developers use libraries because they’re not masochists. And yet, here we are, reading a 2000-word essay on elliptic curves like it’s the Holy Grail. The real innovation? Not writing your own crypto.

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    Scot Sorenson

    December 15, 2025 AT 08:25

    So you’re telling me 78% of devs mess up DER encoding? That’s not incompetence - that’s a systemic failure of crypto education. If you’re building a wallet and don’t know what DER is, you shouldn’t be allowed near a keyboard. And no, ‘I used BitcoinJS’ isn’t an excuse - it’s a confession.

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    Ike McMahon

    December 16, 2025 AT 18:49

    Use the libraries. Seriously. Save yourself the headache. I’ve seen too many people reinvent the wheel and then cry when it falls apart.

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    JoAnne Geigner

    December 18, 2025 AT 07:17

    It’s fascinating, really - how something so abstract, so mathematical, becomes the literal foundation of trust in a decentralized world. We don’t need banks because we have math that doesn’t lie. And yet, we still let fear and ignorance lead us to DIY solutions… it’s almost poetic.

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    Anselmo Buffet

    December 18, 2025 AT 17:01

    Good post. Stick to the tools. Don’t overthink it. Math doesn’t care how smart you think you are.

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    Patricia Whitaker

    December 19, 2025 AT 02:55

    Wow. So much text. All I needed was: ‘Use BitcoinJS or get hacked.’

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    Joey Cacace

    December 19, 2025 AT 18:39

    Thank you for this beautifully articulated guide. The clarity with which you explained ECDSA, DER encoding, and the importance of RFC 6979 is truly commendable. I am deeply appreciative of the diligence you’ve shown in ensuring that even beginners can grasp such a complex topic with grace and precision.

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    Taylor Fallon

    December 20, 2025 AT 02:53

    math is the real hero here 😊 i mean, think about it - no one’s checking your ID, no bank’s approving it, just pure math saying ‘yep, this person owns it.’ that’s wild. i tried coding it once… broke everything. deleted it. now i just use ethers.js. life’s better that way.

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    Sarah Luttrell

    December 21, 2025 AT 13:50

    Oh great, another American pretending crypto is their invention. We had digital signatures in Europe before Bitcoin was even a whitepaper. And now you’re acting like ECDSA is some sacred American tech? Please. Schnorr was developed by a German. EdDSA? Norwegian. Stop acting like you’re the only ones who understand math.

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    PRECIOUS EGWABOR

    December 22, 2025 AT 03:19

    Why are we still talking about ECDSA like it’s the future? We’re in 2024. We’ve got Schnorr. We’ve got STARKs. We’ve got ZKPs. This feels like reading a 2012 blog post on blockchain. Update your sources, bro.

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    Kathleen Sudborough

    December 22, 2025 AT 19:43

    I remember when I first tried to sign a transaction manually. I messed up the sighash flag and lost a testnet transaction. Took me three days to figure out why it kept failing. That’s when I realized: crypto doesn’t forgive. It doesn’t warn. It just says no. That’s why I use libsecp256k1 now. No pride. Just peace of mind.

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    Vidhi Kotak

    December 24, 2025 AT 16:30

    Really helpful! I’m from India and we don’t get much crypto education here. This broke it down so simply. I’m using BitcoinJS for my small wallet project now. No more guessing. Just trust the code. Thanks for saving me from a disaster.

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