Up your Web3 game

Ledger Academy Quests

  • Test your knowledge
  • Earn POK NFTs
Play now See all quests

Ring Signature

Nov 9, 2023 | Updated Nov 9, 2023

What is a Ring Signature in Cryptography?

A ring signature in cryptography is a type of digital signature that masks the addresses or identities of the parties involved in a transaction. 

In blockchain networks, privacy coins like Monero use ring signatures to make it virtually impossible to identify the sender and recipient in a transaction.  The ring signature mixes the identities of the spender and recipient with that of other decoy identities, and by using a one-time key for the transaction that is not linked to users’ addresses.

How Do Ring Signatures Work?

Ron Rivest, Adi Shamir, and Yael Tauman introduced ring signatures as a form of leaking a secret, in a 2001 paper. Consider a White House dilemma where a high-ranking White House official anonymously signs or leaks confidential information to the press. Since there’s a “ring” of probable signers, the president only knows that one of their staff leaked the message but cannot determine the exact signer.

Ring signatures are like group signatures used to obscure the details of a transaction. If many people “sign” the transaction, it becomes impossible to identify the real source of the transaction. It can be created with any number of users. 

Ring signatures help improve anonymity of crypto transactions. When an individual instigates a crypto transaction using their private keys, a third party could possibly find their address. In a ring signature scheme, the public keys of users from past transactions are used as decoys to hide the actual participants and the amount involved from any outsiders. This makes it difficult to determine the actual user, or the key used in the transaction. 

Typically, all signers in the scheme are treated as equals, ensuring that an outsider cannot relate any of the signers to the actual account. The idea is to make it incredibly difficult to identify the private key used in a transaction. The anonymity and privacy of the transaction improve with the size of the ring signature.

Decentralized Finance

Decentralized Finance (DeFI) refers to financial applications and services that are built on a blockchain and operate without a central governing authority (hence, “decentralized”).

Full definition

Hierarchical Deterministic Wallet

A hierarchical deterministic wallet is a special kind of wallet that uses a random number to create virtually infinite cryptocurrency key pairs.

Full definition

Permissioned Blockchain

A permissioned blockchain is a distributed ledger with limited accessibility. Only certain authorized individuals can access it.

Full definition