What are Digital Signatures: How it works, Benefits, Objectives, Concept

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A digital signature is a mathematical scheme for demonstrating the authenticity of digital messages or documents. It a virtual fingerprint that is unique to a person and is used to identify signers and secure data in digital documents. It is a type of electronic signature that ensures compliance with legal regulations by providing the validity and authenticity of a digital document and signer’s identity. Digital signatures can provide proof of origin, time, identity, and status of a digital document. A signature confirms that the data emanated from the signer and has not been tampered with during transit.


What is a digital signature?


A digital signature is a type of electronic signature where a mathematical algorithm is routinely used to validate the authenticity and integrity of a message (e.g., an email, a credit card transaction, or a digital document). Digital signatures create a virtual fingerprint that is unique to an individual or entity and are used to identify users and protect the information in digital messages or documents and ensures no distortion occurs when in transit between signer and receiver. In emails, the email as a whole also becomes a part of the digital signature. Digital signatures are significantly more reliable and secure than other forms of electronic signatures.


Why are digital signatures considered secure?


Digital signatures work using public-key cryptography. Public key cryptography is a cryptographic method that uses a key pair system, private and public. The private key encrypts the data and is available only to the signer. The public key decrypts the data pertaining to the digital document and is given to the receiver. However, both parties must have a registered digital certificate from an issuing certificate authority to connect the signer and their signature. Public key cryptography ensures the security, accuracy, and authenticity of the document. Encryption is the process of encoding data send to the receiver in a form that can only be decoded by the receiver. Authentication is the process of validating the information from the sender is genuine and has not been altered in transit.

Just like handwritten signatures are unique, every signer is given a unique digital identity from a trusted service provider. When the signer signs a document,  the signer’s identity is validated and the signature is encrypted using public key infrastructure technology.


What Is the Importance of Digital Signatures?


Agreements and transactions that were once signed on paper and delivered physically are now being replaced with fully digital documents and workflows as more businesses are conducted online. Malicious actors who want to steal or manipulate data for their own gain are often present whenever precious or sensitive data is shared. To minimize the risk of document tampering by malicious parties, businesses must be able to check and authenticate that these critical business documents, data, and communications are trusted and delivered securely.

In addition to protecting sensitive online data, digital signatures do not impede the effectiveness of online document workflows; in fact, when compared to paper processes, they often help improve document management. When digital signatures are in place, signing a document becomes simple and can be done on any computer or mobile device. And, since the digital signature is embedded in the file, it can be used anywhere it is transmitted and on any device. By providing the status of all documents, determining whether or not they’ve been signed, and watching an audit trail, digitally signed documents are also simple to control and keep track of.

Of course, it’s critical that these digitally signed agreements are legally recognized. Digital signatures comply with key standards such as the ESIGN Act of the United States and the US-EU Safe Harbor.


How do you create a digital signature?


Digital signature technology ensures the process of digitally signing documents is easy and secure. They provide a platform for sending and signing documents online and work with the appropriate Certificate Authorities to provide trusted digital certificates. The Certificate Authority you are using determines what kind of information you may be required to provide. There can also be set regulations and rules on to whom you send documents for signing and the way in which you send them. When you receive a document for signing via email, you must authenticate as per the Certificate Authority’s requirements and then proceed to sign the document by filling out an online form.

How digital signatures work?


The mathematical algorithm generates a public key and a private key that is linked to each other. When a signer electronically signs a document, the mathematical algorithm generates data pertaining to the signed document by the signer, and the data is then encrypted. This data is also called a cryptographic hash. A hash function is a fixed-length string of numbers and letters generated from a mathematical algorithm. This generated string 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. The signer has sole access to the private key and this private key is used to encrypt the document data. The encrypted information or encrypted hash is then transmitted and can be decrypted only by the signer’s public key. The receiver who receives the document also receives a copy of the signer’s public key which is used to decrypt the signature. A cryptographic hash is again generated on the receiver’s side. Both cryptographic hashes are checked to validate their authenticity. The document is considered genuine if they match.

Certificate Authority who are Trust Service Providers(TSP) provides digital certificates to ensure that the keys generated and documents signed are created in a secure environment.

Digital certificates help to validate the holder of a certificate. Digital certificates contain the public key of the sender and are digitally signed by a Certificate authority.

Public key infrastructure (PKI) includes regulations, protocols, rules, people, and systems that aid the distribution of public keys and the identity validation of users with digital certificates and a certificate authority.

This is how a digital signature is sent:


  • In the document platform or application, the sender chooses the file to be digitally signed.
  • The sender’s computer calculates the file content’s unique hash value.
    The digital signature is created by encrypting this hash value with the sender’s private key.
  • The receiver receives the original file as well as its digital signature.
  • The receiver opens the associated document application, which recognizes the digitally signed file.
  • The digital signature is then decrypted by the receiver’s computer using the sender’s public key.
  • After that, the receiver’s computer computes the hash of the original file and compares it to the now-decrypted hash of the sender’s file.

Benefits of digital signatures


While digital signatures have caught the fancy of many corporates and executives, what exactly is it? Simply put, a digital signature is your electronic fingerprint. It lets you sign a document electronically and it validates the signer. It is a mathematical code that authenticates the document from the sender and ensures the document remains unaltered on reaching the recipient.

Fears about the security of digital signatures are reasonable, however, it uses an accepted format called a Public Key Infrastructure, which provides a very high level of security making it difficult to duplicate. Digital signatures make office paperwork far more efficient, but laws regarding this technology vary between countries. The benefits of digital signatures have more offices and companies getting on the bandwagon in favor of e-signatures, making for a far more efficient and secure workplace, digitally.

In many parts of the world including North America, the European Union, and APAC, digital signatures are legal and has the same value as hand signatures.

Advantages of digital signatures

  • Saves time


You no longer have to wait for your manager to return from a holiday or conference for that signature. Digital signatures ensure that businesses save on cost and time with documents and contracts signed off with a click of a button. There are huge savings in cost and time especially when the person required to sign is in a geographically different area. Documents can be signed off almost instantly, from anywhere. Be it a tablet, phone or computer, digital signatures can seamlessly ensure this otherwise tedious task is wrapped up in minutes.

  • Cost savings


Many companies also see significant cost savings, with little or no expense in ink, paper, printing, scanning , shipping/delivery or travel expenses. There are also savings in other indirect costs such as filing, rekeying data, archiving, or tracking.

  • Workflow efficiency


With lesser delays, digital signatures ensure better efficiency in workflow. Managing and tracking documents are made easier, with lesser effort and time involved. Many features of digital signatures help speed up the work process. For instance, email notifications help remind the person to sign, while status tracking, help to know at which stage the document is at.


  • Better customer experience


Digital signatures provide the convenience of signing important documents where ever a customer or the person to sign is located. Salespersons do not have to wait for the customer to come to the bank or office. Documents can be signed off at the doorstep. This is ideal, especially in remote areas and smaller townships providing improved and personalized services. The customer has the freedom to be anywhere, and engage with a company, making services and businesses far more easy, quick, and user–friendly.


  • Security


When it comes to signatures, authenticity, and security are a priority. Digital signatures reduce the risk of duplication or alteration of the document itself. Digital signatures ensure that signatures are verified, authentic and legitimate. Signers are provided with PINs, passwords, and codes that can authenticate and verify their identity and approve their signatures. Time stamping provides the date and time of the signature and thus provides a track of the document, minimizing any risk of tampering or fraud. Security features embedded in digital signatures ensure that documents have not been altered without authorization.


  • Legal validity


Digital signatures provides authenticity and ensures that the signature is verified. This can stand in any court of law like any other signed paper document. Time stamping and ability to track and easily archive documents improve and simplify audit and compliance.

  • Future validity


Digital signatures also hold validity into the future. ETSI PDF Advanced Signatures (PAdES) with its eIDAS requirements have validity well into the future with its long term signature formats. Should there be far reaching technological changes, digital signatures would still be valid for the foreseeable future.

  • Environmental benefits


As corporates and business become more conscious of their role in sustainability, digital signatures is a step ahead in their efforts in reducing waste and being environmental friendly.

  • Business efficiency


The costs involved in integrating digital signatures into the work processes is relatively small, compared to its benefits. With quicker contract turnaround time, and reduced workflow time, digital signatures are ideal for both small and large organizations.

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