Source: https://www.usnews.com/360-reviews/privacy/what-is-digital-signature

A digital signature is a type of electronic signature. It’s used as a cybersecurity measure to encrypt a document to ensure its authenticity. According to the Cybersecurity and Infrastructure Security Agency (CISA), “Digital signatures create a virtual fingerprint that is unique to a person or entity and are used to identify users and protect information in digital messages or documents. In emails, the email content itself becomes part of the digital signature.”

Encryption is a key part of a digital signature. It prevents documents from being altered by hackers or other bad actors and authenticates the signer.

“A digital signature is an electronic signature and [public key infrastructure]-based certificate (digital ID) combined into one,” explains Lila Kee, chief product officer, and general manager, Americas for GlobalSign, a provider of digital signatures. “They provide integrity and, with the use of trusted, digital certificates, authenticity to digital messages such as email, documents, and code distributed via the Internet.”

Usually:

They’re used to sign important documents like mortgage documents. As a result, they’re not the same thing as simply typing your name on an electronic document. 

Some main Features to take into account.

  1. Before you can use a digital signature, you must first have a digital signature certificate. “This certificate is a personal key that encrypts the documents and guarantees their safety,”.
  2. A digital signature certificate also has pertinent information about each user, including their name, email address, and location. The certificate can be stored on a hard drive so that only the user can access it.
  3. The document is then encrypted with the user’s private key.
  4. Hashing a document and encrypting it with a private key, the digital signature process effectively creates a chain of custody. This means that changes can’t be made to the document without all signers knowing about them, and signers can’t deny having signed the document.
  5. These extra steps are what makes a digital signature more secure than an electronic signature,”. “Instead of just using a symbol, it contains your personal key, which verifies the validity of the document.” Effectively, the digital signature serves as an electronic fingerprint of the signer.

Benefits of Digital Signatures

Digital signatures are a way to promote trust between two parties who must communicate electronically. They provide a way for the parties to be certain that their communications haven’t been altered and that the information they’re sharing has been kept secure.

Related benefits of digital signatures include:

Improved Workflows 

Digital signatures avoid the need to check and recheck documents for accuracy after they’ve been transmitted.

Security

A digital signature guards against inauthentic documents being presented as real because it’s tied to a specific signer. It can also guard against unauthorized changes to documents and against loss or destruction. A digital certificate obtained from a legitimate certificate authority helps ensure this security.

Audit Trail

An audit trail accompanies each document, making it possible to trace a document back to its origin to verify it.

Elimination of Fraud

The digital signature prevents forgery and other types of fraud, including insider fraud, by using public key infrastructure to ensure the legitimacy of a document.

Universal Legality

Digital signatures use standards-based in both the EU and the U.S., and developers ensure that their digital signature coding meets international standards. This means that digital signatures can be made anywhere and accepted everywhere.

Time Management

Once digital signature functionality is in place, the signing and approval process is fast and easy. This eliminates the delays and potential risk of passing paper documents through the approval process.

Social Responsibility

In addition to reducing or eliminating the paper waste of the document signing process, the use of digital signatures helps create confidence in the security of documents in an organization. This reduces the chance of embarrassing leaks of personally identifiable information because of lax security or encryption failures.

Cost Savings

The use of digital signatures can save a significant amount of money that would otherwise be spent on routing and managing paper. Document management becomes faster and storing documents securely becomes easier. There are also cost savings in printing, paper, and secure management of paper documents.

Uses for Digital Signatures

Digital signatures are already widely used, especially in the health care and financial services industries. Other industries are starting to use them more often as well. Here are some specific examples:

Government

When you sign your tax return online, you’re using a digital signature. Digital signatures are also now appearing on government procurement documents, bills, and even ID cards. The primary reasons are security (bogus tax returns are a huge problem) and cost.

Health Care

Signatures are required widely in the health care sector for everything from insurance billing to providing permission for treatment. Security has been a challenge in health care, and digital signatures are a major step in helping with that. Using digital signatures eliminates the delays and security issues of paper documents.

Manufacturing

A number of steps in manufacturing require signatures, including ordering materials, approving designs and changes to designs, production schedules, and staffing communications. Digital signatures make these processes more efficient.

Financial Services

Digital signatures are common in financial services, especially for activities that can be performed remotely. This includes loans for cars, credit card applications, and other contracts. The banking industry is moving aggressively to digital signatures.

Cryptocurrencies

Digital signatures are used for blockchain authentication with cryptocurrencies. They’re also used for verification of cryptocurrency transaction data, where digital signatures can also help show ownership.

Digital Signatures vs. Electronic Signatures

Digital Signature

  • Electronic signature meets specific requirements like security.
  • Digital signatures work by proving that a digital message or document was not modified – intentionally or unintentionally from the time it was signed.
  • A digital signature is a secure means of signing a document that allows you to confirm its authenticity, as well as its provenance.
  • EU implemented its first Electronic Signatures Directive in 1999, but that law has been repealed and replaced with an updated regulation, eIDAS (Regulation on electronic identification and trust services).

Electronic Signatures 

  • They don’t way to prove if the electronic document was changed.
  • An electronic signature is simply a signature that shows up on an electronic document.