How do Digital Signatures work?

Being a technological concept, digital signatures are best explained (and understood) using examples.

Let’s say Bill needs to mail across a confidential report to Steve. To ensure that data security is not compromised with, Bill compresses the lengthy report into just a few lines using special software and then encrypts it using his private key. As the name suggests, it’s private—known only to Bill. Applying his private key to the encrypted document is what digital signature really is. He then sends it across to Steve, along with the public key.

Steve, in order to read the document’s contents, must first open the document in its compressed form. He uses the public key to do this and if he succeeds, it means that Bill had signed it, that the document contents have not been changed since the time of digitally signing it and that now Bill cannot claim that the document did not originate from him. Using special software, Steve decrypts the document contents in readable form, completing the process.