What is a Digital Signature?

All businesses feel the urgency of digital acceleration in their respective industries. COVID-19, the supply chain crisis, and the ongoing need to overhaul costs and streamline operations have made the move towards digital an absolute necessity to stay competitive. The way their customers – and their employees – sign forms, contracts and other documents are moving towards the digital direction. One critically important element of the digital document revolution is digital signatures.  

What is a Digital Signature? 

A digital signature is a specific type of electronic signature that serves as a virtual “fingerprint” used to authenticate the identity of the signer and the digital document they sign. When a document is digitally signed, a digital certificate is permanently embedded in the document. In addition to accurately identifying the signer and the time the signature took place, this digital certificate verifies whether the document has been tampered with or not. 

Digital signatures are safer and more secure than traditional pen-and-ink signatures. With handwritten signatures, you can’t always tell who signed the document and when they signed it. Additionally, you can’t tell whether the document has been tampered with after the handwritten signatures have been made. 

The technology behind digital signatures has been used for many years and it’s highly standardized and accepted by many businesses, organizations, and governments throughout the world. Internationally, digital signatures are more widely accepted than more simplistic (and less secure) types of electronic signatures. Digital documents embedded with digital signatures are legally valid the day they are signed and will continue to be legally valid many years ahead.  

What is the Difference Between a Digital Signature and an Electronic Signature? 

As mentioned previously, a digital signature is a specific type of electronic signature, but not all electronic signatures are digital signatures. Each type of signature carries a distinct set of defining functions and features.  

Electronic Signatures or e-signatures

• A legal term that is defined legislatively 
• Uses electronic sounds, symbols or processed attached to or associate with a contract or record to verify the origin of a signature 
• Confirms a signer’s intent to sign a document but doesn’t always provide proof of a signer’s identity or the document’s integrity 
• Not regulated like digital signatures – each electronic signature vendor makes their own standards 
• Easy to use, but less secure than digital signatures 
• Electronic signatures can’t show if someone tampers with the document after it is signed 

Digital Signatures 

• The most secure type of electronic signature 
• Uses a mathematical algorithm to validate the authenticity and integrity of a document
• Produces a comprehensive audit trail, tracking and recording every action of the digital signing process 
• Adheres to strict, published international and industry standards 
• Offers tamper evidence 
• Provides independent verification of who signed the document and when they signed it 

Who Uses Digital Signatures? 

An increasing number of organizations in both the public and private sector are starting to use digital signatures to modernize their workflows in addition to enhancing the security of their document processing procedures.  

Human Resources 

Human Resource professionals deal with legal agreements and contracts where digital signatures have made a huge impact on their ability to efficiently process digital documents. From non-disclosure agreements to employee contracts and onboarding, digital signatures provide the security and transparency needed to make sure all forms and documents are safe and authentic. 

Financial Services 

The financial sector has entered a new age of banking due to digital signatures. Contracts, paperless banking, loan processing, insurance documentation, mortgages and more have been made possible by the secure and efficient technology behind digital signatures. In this highly regulated industry, guidance and regulations put forth by the Consumer Financial Protection Bureau (CFPB), the Federal Financial Institutions Examination Council (FFIEC), the Electronic Signatures in Global and National Commerce Act (E-Sign Act) and state Uniform Electronic Transactions Act (UETA). 

Healthcare 

The healthcare industry has improved the efficiency of administrative and treatment processes in addition to strengthening data security thanks to the advent of digital signatures. Both doctors and their patients use digital signatures to deliver prescriptions, patient data and process other documents. Most companies in the healthcare sector must comply with certain laws and regulations compelling them to use digital signatures to present their authenticity to government bodies.  

Government 

Digital signatures are used by governments across the globe for many reasons including ratifying laws and managing contracts, processing tax returns, and verifying business-to-government transactions. The digitization of these processes has lowered costs and increased security when handling sensitive documents. Most government entities must obey strict laws, regulations and standards when using digital signatures. Many government employees use smart cards to ID their citizens and employees – these physical cards are embedded with a digital signature granting the cardholder access to buildings and internal systems.  

Cryptocurrencies 

Bitcoin and other cryptocurrencies use digital signatures to authenticate the blockchain they are built on. Transaction data and asset ownership on the blockchain can also be verified through digital signature technology.  

Manufacturing 

Product design, marketing and sales, quality assurance and manufacturing enhancement processes are all improved by the use of digital signatures in the manufacturing industry. Guidelines and regulations for using digital signatures in this industry are provided by the Digital Manufacturing Certificate (DMC), the National Institute of Standards and Technology (NIST) and the International Organization for Standardization (ISO). 

What are the Benefits of Digital Signatures? 

Digital signatures provide numerous benefits for businesses and organizations making the move towards a paperless office. In addition to being environmentally friendly by cutting out paper documents and the travel requirements needed to sign documents in person, digital signatures save time, cut costs and improve security. The benefits of digital signatures also include, but are not limited to: 

• Security – Digital signatures are more secure than traditional handwritten signatures due to the cryptographic encryption embedded in the documents being signed.  
   
• Legality – Digital signatures have the same legal value as handwritten signatures. The authenticity of the signature is verifiable and can stand similar to traditional pen and paper signatures in the court of law.  
   
• Workflow – Efficiency in the workplace is something all companies strive for – and thanks to digital signatures, processing documents has become easier and more effortless than ever before. This digital innovation saves both time and money for businesses. 
   
• Customer Experience – Would you rather enlist the services of a business using traditional pen and paper documents that take days if not weeks to process, or work with a company who can process your documents in a fast and secure operation? Customers want a faster, better and more streamlined experience – and that’s what they get with a company who uses digital signatures for their customer facing operations.

How Do Digital Signatures Work? 

Digital signatures have revolutionized the way businesses process their documents in today’s world. They increase the speed at which parties can sign critical documents, reducing the waiting time from days or weeks down to minutes or hours. Digital signatures also provide a level of convenience for companies and their customers to sign forms, applications and other important documents where they are, whenever they receive the link. Additionally, and most importantly, digital signatures enhance the security of the document signing process. These benefits have increased production and streamlined workflows for businesses across the globe – but exactly how do digital signatures work? 

In order to fully understand the technology behind what makes digital signature so effective, a few terms must be defined. 

Certificate Authority - A person’s identity is validated by a certificate authority (a trusted third party) and generates a public/private key pair on their behalf or associates an existing public key provided by the person to that person. After a certificate authority validates someone’s identity, the certificate authority issues a digital certificate that is digitally signed by the certificate authority. This digital certificate can then be used to verify a person associated with a public key when requested.  

Digital Certificates – The purpose of a digital certificate is to accurately identify the holder of a certificate. Digital certificates contain the public key of the organization or individual and are digitally signed by a certificate authority. Digital certificates can also include more information about the signer of the document.  

Public Key Infrastructure - PKI includes the standards, policies, people and systems that support the distribution of public keys and digital certificates and certificate authority. 

Hash Function – Also called a “hash’, a hash function is a fixed-length string of letters and numbers generated by a mathematical algorithm and arbitrarily sized files like pictures, emails, documents or other type of data. This generated string of letters and numbers is unique to the file being hashed and is a one-way function. A computed hash cannot be reversed to find other files that may generate the same hash value.  

Public Key Cryptography – Also known as asymmetric encryption, public key cryptography is a cryptographic method that uses a key pair system consisting of a public key and a private key. The public key encrypts the data and the private key decrypts the data. Public key cryptography can be used multiple ways to guarantee authenticity, integrity and confidentiality: 

• Integrity is ensured by creating a digital signature of the message using the sender’s private key. The message is hashed and then the hash value is encrypted with their private key. Because of this process, if the message has been changed in any way, there will be a different hash value.  
• The entire message with the recipient's public key is encrypted ensuring confidentiality. The only party who can read the message is the recipient who possesses the corresponding private key.
• Confirm the identity of the user using the public key and check it against a certificate authority. 

Pretty Good Privacy (PGP)/OpenPGP - There is an alternative to Public Key Infrastructure: Pretty Good Privacy or Open PGP, where users “trust” each other by signing certificates of people with verifiable identities. The higher level of interconnectedness between these signatures creates a "Web of Trust" where particular users can be accurately verified.

Digital signatures work by providing legally verifiable evidence that a digital message was not changed whether intentionally or unintentionally by any party from the time it was originally signed. A unique hash of the message or document is generated encrypting it using the sender’s private key. This hash is unique to the message or document and changing any part of it will completely change the hash.  

After the message or digital document is completed, the digital signature is put in place and sent to the recipient. Then, the recipient generates their own hash of the message or digital document and decrypts the sender’s hash from the original message using the sender’s public key. The recipient compares the hash they generate against the sender’s decrypted hash; if they match, the message or digital document has not been modified and the sender is authenticated. 

SIGNiX Digital Signatures – What Makes Us Different 

With digital signatures from SIGNiX, legal evidence is embedded into every single signature that takes place on our platform. You can be sure of the identity of each person signing the document. We use a patented process to confirm the identity of each signer that comes into our system and authorize them to sign documents with a digital signature. Your data is not stored on our servers, unlike some other digital signature solutions. 

SIGNiX’s TotalAudit™ keeps track of every step of the signature process - making it the most detail audit trail on the market. It is a powerful tool that can be used to prove who signed a document and when they signed it. 

• Transaction creation 
• Emails and notifications sent to any signer 
• Signers consent to use e-signatures 
• User authentication 
• Documents viewed by each signer 
• Signature creative (by each signer) 
• Party agreement to/acknowledgement of document 
• Transaction completion 
• Document downloads after signing 
• Cancellations and opt outs 
• Changed party information 

Here are more security features for the SIGNiX digital signature solution: 

• 256-bit military grade encryption 
• Digital certificate with each signature 
• Authentication data 
• Transaction ID 
• Cryptographic hash with each signature 

SIGNiX combines the convenience of electronic signatures with all the security of digital signatures using our patented cloud-based technology.  Interested in learning more about digital signature solutions from SIGNiX? Get a demo here!

Digital signatures have improved the workflows and cut costs of numerous businesses in highly regulated industries all over the world. Whether it’s onboarding new employees or customers, signing contracts, forms, or other critical documents, digital signatures have streamlined countless business processes for a variety of organizations. In an ever increasing and expanding online business world, digital signatures are being used more widely to help secure and safeguard the integrity of the data business need to function. With a clearer understanding of digital signatures and the technology behind them, organizations can better protect their information, documents and transactions between their customers and their employees.