How is RSA Used for Authentication in Practice? What are RSA Digital Signatures?

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RSA is usually combined with a hash function to sign a message.

Suppose Alice wishes to send a signed message to Bob. She applies a hash function to the message to create a message digest, which serves as a "digital fingerprint" of the message. She then encrypts the message digest with her RSA private key; this is the digital signature, which she sends to Bob along with the message itself. Bob, upon receiving the message and signature, decrypts the signature with Alice's public key to recover the message digest. He then hashes the message with the same hash function Alice used and compares the result to the message digest decrypted from the signature. If they are exactly equal, the signature has been successfully verified and he can be confident that the message did indeed come from Alice. If they are not equal, then the message either originated elsewhere or was altered after it was signed, and he rejects the message. With the method just described, anybody read the message and verify the signature. This may not be applicable to situations where Alice wishes to retain the secrecy of the document. In this case she may wish to sign the document then encrypt it using Bob's public key. Bob will then need to decrypt using his private key and verify the signature on the recovered message using Alice's public key. A third party can also verify the signature at this stage.
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