DEFINITION of 'Ring Signature (Cryptocurrency)'

Ring signature is a mechanism used to protect the privacy of the sender of a message or a transaction on cryptocurrency networks.

BREAKING DOWN 'Ring Signature (Cryptocurrency)'

Ring signature involves fusing together inputs of multiple signers with that of the original sender. These signers are the various participants of a group on the blockchain, whose signatures are clubbed together to authorize the transaction. Such signatures are akin to multiple holders signing a check drawn on a joint account, though the identity of the signer(s) is not known.

For example, Bob wants to send a transaction to Ken on a blockchain network which has a ring signature size of five. One of the inputs will come from Bob, while the rest will come from other four members of the blockchain. This pooling of inputs from various members will result in five different signatures, of which four will be decoy signatures and only one will be genuine.

Ring signatures are generated using a combination of sender’s account keys with public keys on the blockchain. It makes it private as well as unique. It hides the identity of the sending participant as it is computationally impossible to assess which group members' keys were used to generate the complex signature.

To an outsider, all five will be equally-likely without the possibility of knowing which is the genuine one. The transaction’s key image on the network, which is used to authenticate and verify the transaction during the mining exercise, ensures that the transaction is confirmed only through a secure and standard manner without any possibility of duplicity or hacking.

This ensures a secure yet anonymous transaction, as well as its successful authorization. Popular cryptocurrency network Monero, which is known for its privacy and security features, has implemented ring signatures. (See also, What Is Monero (XMR) Cryptocurrency?)

  1. Signature Guarantee

    A signature guarantee is a form of authentication, issued by ...
  2. Securities Transfer Agents Medallion ...

    Securities Transfer Agents Medallion Program is a verification ...
  3. Medallion Signature Guarantee

    A medallion signature guarantee is a special certification stamp ...
  4. Stealth Address (Cryptocurrency)

    Stealth addresses hide the identity of the receiver of a blockchain ...
  5. On Chain Transactions (Cryptocurrency)

    On-chain transactions occur on the cryptocurrency blockchain, ...
  6. Mining

    Mining validates transactions on the cryptocurrency network and ...
Related Articles
  1. Tech

    How Does Blockchain Work?

    Blockchain technology supports the cryptocurrency space and many other promising applications.
  2. Tech

    The Five Most Private Cryptocurrencies

    Investopedia's list of private cryptocurrencies that claim to offer enhanced security and protection of user identity.
  3. Tech

    Monero Price Tops $350 Ahead of March 14 Hard Fork

    The price of Monero cryptocurrency has spiked almost 25% a week ahead of its mid-March hard fork.
  4. Managing Wealth

    Should You Insure Your Wedding Ring?

    A wedding ring's value and your current insurance coverage play a role in a decision to insure the ring.
  5. Personal Finance

    How Much Should You Spend on an Engagement Ring?

    The history and popular perception of engagement rings runs counter to the surprising correlation between ring cost and marriage success.
  6. Tech

    Explaining the Crypto in Cryptocurrency

    Ever wondered about the cryptography involved in cryptocurrencies?
  7. Insights

    Signature Bank Expands Client Banking Teams (SBNY)

    New York-based Signature Bank enhanced its private client banking network with the addition of three veteran bankers.
  8. Tech

    Forget Bitcoin: Blockchain is the Future

    Blockchain is the technology that undergirds the cryptocurrency world, but itspotential uses extend much farther.
  9. Tech

    Why Do A High Percentage Of Crypto Transactions Have No Economic Value?

    A high percentage of cryptocurrency transactions have no economic value, according to recent research.
  10. Tech

    'Zero Knowledge Proofs' Could Boost Blockchain Adoption on Wall Street

    The complex mathematical proof encrypts transactions, making client and transaction privacy possible.
  1. What is the difference between marginal benefit and marginal cost?

    Understand the difference between marginal benefit and marginal cost. Learn how and why both marginal cost and marginal benefit ... Read Answer >>
  2. What is the history behind the opening and closing bells on the NYSE?

    Similar to school bells, the New York Stock Exchange's (NYSE) opening and closing bells mark the beginning and the end of ... Read Answer >>
  3. What are some examples of companies or products that have outstanding brand equity?

    Brand equity is the heart of reputation-building for companies and products. With solid equity, the quality of a service ... Read Answer >>
Trading Center