Electronic and Digital Signatures
Do You Need Electronic and Digital Signatures for Your Business?
The pandemic and widespread adoption of ES software like DocuSign and Adobe Sign has greatly increased the use of DS. According to MarketsandMarkets, the global DS market is expected to grow from $4.0 billion in 2021 to $16.8 billion by 2026. Let’s look at the most popular questions on ES and DS, their legal aspects, and key benefits.
What is an Electronic Signature?
ES is a legal way to get electronic documents approved. The U.S. Electronic Signatures in Global and National Commerce Act (ESIGN) defines it as ‘an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record’.
ESs’ are accepted nearly everywhere to replace handwritten signatures in any personal or business transaction, like contracts, applications, change authorizations, etc.
What is a Digital Signature?
DS is a math scheme used to verify the authenticity of digital documents. The DSs let users confirm that the information does come from the signer and that it has not been altered, as well as help prevent unauthorized access and are often used for software distribution, financial transactions, and similar cases.
How does a DS work?
DS solution providers use a Public Key Infrastructure (PKI) protocol consisting of standards, policies, and systems that support public key distribution. PKI requires DS vendors to use a mathematical algorithm to generate two long numbers known as public and private keys. For signature integrity protection, PKI often requires a Certificate Authority (CA) — a trusted third-party provider that verifies the signer’s identity and issues a digital certificate with the digital signature.
A DS is generated with a private key, securely kept with the signer. The algorithm uses the signed document to produce a hash — a unique fixed-length string of numbers and letters — so that any changes made to any part of the document will entirely change the hash. The generated data is then encrypted forming a digital signature bearing its creation timestamp.
When a digital document is sent, the recipient generates their own hash of the document, decrypts the sender’s hash with the sender’s public key, and matches both hashes. If the document has not been altered, it should match 100%.
ES and DS: the difference
Both digital and electronic signatures are used to sign documents and verify the signer. However, they differ in how they are implemented.
ES software uses electronic methods to verify the signer’s identity such as an email address, corporate ID, or phone number. DS assumes the use of certificate-based digital identifiers. The key difference between ES and DS is that the latter comes with encryption standards. DS verifies a signature by linking it to the document via cryptography. DS algorithm encrypts the document with hidden digital codes to help prevent tampering and duplication.
How can adopting Electronic and Digital Signatures improve your business?
Now that we’ve explained what ES and DS are and how they work, let’s see how you can benefit from using them. The main question is should your business adopt electronic and digital signatures? The answer is a definite ‘Yes’ as there are plenty of reasons to start using ES and DS in your business. Many industries and regions have adopted electronic and digital signature standards for business. Furthermore, these signatures can be used for higher-risk transactions thanks to their enhanced security.
Benefits of ES and DS
To show how your business can benefit from ES and DS, we’ll go over each advantage so that there is no doubt left. The list is long: security, compliance, cost-efficiency, non-repudiation, authentication, integrity, and time management.
Signing a paper document might give the signer a sense of security. However, a handwritten signature can be forged, let alone the document itself.
A DS can prevent that with a Trust Service Provider (TSP) certificate. Cryptographically linked to the document, the signer’s identity is re-verified each time the signer uses DS. Endorsed by a unique digital ID, DS’s eliminate the risk of forgery providing the highest level of security and ensuring the document hasn’t been altered in any way.
One common question is the legal force of the DSs. Digital certificates provided by licensed TSPs ensure DS standards comply with all international norms and laws.
By taking the paper out of the equation, ES and DS help reduce office supplies costs and those associated with document management and storage, i.e. physical space and document distribution.
Non-repudiation is basically linking action or change to a particular person, who cannot deny having signed a document once their DS was used. Non-repudiation is achieved via cryptography (via a private key solely owned by the signer) and ensures that the party cannot deny the authenticity of his or her signature.
Likewise, DSs and their encryption mechanisms can be used to verify the identity of the original messages, which is especially critical in finance where the message or document source must be authenticated.
Integrity protection implies that once the DS signs the document, any further changes to it will void the signature. In fact, the DS algorithm prevents you from creating a new document with a valid signature as it is not computationally feasible.
Time is money. Using an ES or a DS app, you can save hours that would otherwise be spent waiting for a courier or scanning signed documents. Needless to say, wasting hours locating a physical document among many others is frustrating.
By enabling recipients to sign documents with a digital signature, you can greatly streamline office and legal workflows, saving hours, and in some cases even days, ultimately allowing yourself to close deals in minutes. You and your teams can focus on key tasks rather than shuffling through tons of paper, printing, and scanning, not to mention the positive impact that going paperless can have on the environment.