A Definitive Guide to Digital Signatures
Using digital signatures is widely recognized as a best practice for verifying electronic transactions. But what exactly are they? Why are they important? And how can you leverage them to your advantage?
Read on to learn everything you need about digital signature solutions.
What is a digital signature?
According to the National Institute of Standards and Technology (NIST), a digital signature is the result of a cryptographic transformation of data that provides a mechanism for verifying origin authentication, data integrity, and signatory non-repudiation.
In simpler terms, it’s a mathematical algorithm used to cryptographically bind a digital document to an identity, which can include a person, machine, or organization. Therefore, digital signatures can identify users and/or organizations while also protecting the contents of a signed document.
Why does this matter? Because it mitigates the challenges of electronic signatures and the remote digital signing process, answering three questions key to authenticity, integrity, and non-repudiation:
- How do you confirm the signer is who they claim to be?
- How can you ensure the contents of the signed document haven’t been changed or tampered with?
- How do you prevent someone from disputing the validity of their signature?
In short, digital signatures attach identity details to a digital document or message, thereby providing proof of authenticity and integrity — and with that, non-repudiation.
What’s the difference between a digital and paper signature?
A paper signature — also called a “handwritten signature” or “wet signature” — is exactly what it sounds like: a name etched in ink onto a paper document.
The primary properties of traditional signatures are twofold:
- They’re supposed to be associated with a particular individual.
- They generally represent a commitment or agreement, the specifics of which depend on the context.
Although they’ve been used for ages, and will certainly continue to be, traditional signatures come with inherent risks. Because they’re nothing more than visual marks, you may have a difficult time proving the authenticity of a handwritten signature without the assurance of a witness. Moreover, you may not immediately know whether someone altered a paper document.
By contrast, digital signature technology automatically detects alterations, making it easy to ensure document integrity. Likewise, identity verification is core to the signing process — and better yet, it doesn’t require any witnesses whatsoever. Plus, it keeps an electronic record of any changes, providing an audit trail in case of potential disputes.
What’s the difference between digital and electronic signatures?
An electronic signature, or e-signature, is a way of signing a digital document. It allows a person or entity to sign electronic transactions and documents using e-signature software rather than scribbling their name on a paper-based signature field.
Notably, “e-signature” is a generic term that encompasses many different types of electronic signatures — digital included. The key difference between electronic and digital signatures is that the former offers a much lower level of trust. Why? Because e-signatures don’t always provide proof of identity and can’t be verified by computers.
For example, most electronic signature software or services use a visual mark to represent a paper signature, such as a drawn symbol or uploaded image. In reality, virtually anybody could do this, which means it doesn’t offer sufficient proof of authenticity. For an electronic signature to be trusted it usually requires extra information such as a detailed and secure audit trail of the signing process.
A digital signature solution, on the other hand, uses a cryptographic operation that attaches the exact content of a document to a digital certificate, which contains details that can verify the signer’s identity. In turn, these are considered much more secure than other e-signatures, providing strong, indisputable assurance.
Property
Paper Signatures
Electronic Signatures
Digital Signatures
*Entrust does not provide legal advice; always check signature requirements with a local attorney.
What’s an advanced electronic signature?
An advanced electronic signature is a specific signature classification relevant to the European Union (EU). In short, most countries and regions have their own unique electronic signature schemes, which means they have different rules and regulations about how an electronic signature should be created to be legally recognized.
In 2016, EU member states enacted the electronic Identification, Authentication, and Trust Services (eIDAS) regulation. There are three types of signatures under eIDAS:
- Simple electronic signature: Doesn’t require strong authentication or identity verification, rendering this the lowest-assurance option.
- Advanced electronic signature: May require the signer to verify their identity using electronic means, such as biometrics, access codes, or digital certificates.
- Qualified electronic signature: Offers the most assurance, requiring the strongest technical requirements, such as the use of a Qualified Signature Creation Device (QSCD).
Although regulations vary by jurisdiction, eIDAS raised the bar for digital signatures worldwide. Notably, if you operate in the EU, you may be subject to its requirements. For more information, check out our guide to eIDAS compliance.
Why are digital signatures important?
The digital signature market is booming. In fact, projections estimate its $7 billion valuation in 2024 will skyrocket to over $66 billion by 2032 — a staggering 32% compound annual growth rate.
Why is digital signature software receiving so much buzz? Because these signatures are increasingly necessary. Electronic transactions are now the norm in our digital world, but traditional signatures simply don’t offer enough security. Disputes are much more likely without face-to-face meetings and many organizations don’t have the visibility to detect modifications to electronic documents.
Digital signatures address both of these concerns, offering additional security properties and protections. Compared to other e-signatures, they’re by far the most easily verified and reliable in regard to document integrity.
Benefits of digital signatures
With the right digital signature solution, you can unlock a host of key advantages:
- Enhanced security: Most importantly, the digital signing process offers stronger assurance when it comes to authenticity and data integrity. Using cryptography, it generates digital signatures that can’t be forged or tampered with, ensuring the document is legally binding. This not only protects against fraud but instills more trust in the transaction.
- Streamlined document signing: Digital signatures expedite the signing process by eliminating paper-based, manual workflows. Rather than gathering every handwritten signature individually, you can distribute the digital document to all parties and quickly push the process forward.
- Lower transaction costs: Replacing hardcopy processes can also eliminate the need for printing, scanning, and mailing documents, which ultimately translates into cost savings.
- Embedded audit trail: Digital signatures embed an electronic record inside the metadata of the signed document, including the signer’s identity, the date and time they signed the document, and any modifications that have been made. This audit trail provides transparency and accountability, helping parties comply with regulatory requirements and resolve disputes with concrete evidence.
- Simplified identity verification: With the right solution, you can obtain digital identity credentials from certified authorities, eliminating the need for manual verification processes. This enhances efficiency while reducing the risk of fraud.
How do digital signatures work?
Digital signature technology relies on three components:
- Public key cryptography
- Digital certificates
- Hashing
Let’s review each one in more detail to understand how they work.
1. Public key cryptography
Digital signatures are generated using public key cryptography, also known as asymmetric cryptography. This technique works by generating a pair of mathematically linked keys for encryption and decryption: a public key and private key.
The person or entity that creates the digital signature uses the private key to encrypt signature-related information, such as identity details, timestamps, and more. As the name implies, this key is kept secret, whereas its counterpart can be freely distributed. The only way to decrypt the encrypted data is by using the public key, which allows the receiving party to validate the signer’s digital signature.
If the recipient can’t open the document with the signer’s public key, it may indicate the signature is invalid.
2. Digital certificates
Public key infrastructure (PKI) is a credential system that issues cryptographic assets called digital certificates. A digital certificate is an electronic document that contains a digital signature’s public key. It holds identity details associated with the signer, allowing recipients to confirm the public key belongs to a specific organization.
Critically, a digital certificate must be issued by a publicly vetted Certificate Authority (CA). CAs, including Entrust, are third-party organizations responsible for issuing digital certificates and verifying the identity of certificate holders. CAs play a crucial role in PKI and digital signing, assuring all parties involved that their keys are protected against forgery or malicious use.
3. Hashing
Digital signature software also uses a process called hashing, which attaches a unique digital fingerprint to the document. In essence, a hash is a fixed-length text string generated by a mathematical algorithm.
Before signing, the signer’s digital signature solution calculates the hash value of the document using cryptography. It then encrypts the hash using the signer’s private key, which effectively creates the digital signature.
When a recipient receives the signed document, they can calculate its hash value and use the signer’s public key to decrypt the signature. If the calculated hash value matches the decrypted one, it proves the document hasn’t been altered since it was signed.
How do you secure the document signing process?
Although digital signatures are highly secure, there are several ways bad actors circumvent their protections. For example, some of the most notable risk factors include:
- Key forgery and theft: Cybercriminals can steal cryptographic keys, which would allow them to forge signatures on digital documents. Likewise, they can use stolen keys to commit identity theft and unauthorized transactions, as the digital signature is considered a legal representation of the signer’s identity.
- Malware: Some hackers embed malware into digital documents, which they use to infect the signer’s devices, steal sensitive data, and launch larger, more malicious attacks.
- Weak algorithms: Older cryptographic schemes may become vulnerable to hacking attempts over time. In fact, with the advent of quantum computing, it’s only a matter of time before many of today’s encryption schemes are rendered obsolete.
The good news? At Entrust, we have a wide range of secure digital signature solutions that can help you protect your cryptographic assets and your user identities. Whether you’re in the public sector or operating a private organization, our globally trusted certificate services, hardware security modules (HSMs), and identity verification platform can fit your unique needs. Altogether, our verified signing portfolio includes:
- Entrust Signhost: A cloud-based electronic signature portal available via web browsers, mobiles, or via a REST API. It is fully integrated with Remote Signing Service, Signing Automation Service, and Identity as a Service
- Entrust Remote Signing Service: A cloud-based solution for issuing digital certificates and generating secure digital signatures.
- Entrust Signing Automation Service: A cloud-based service that allows you to issue branded certificates and electronic seals.
- Entrust Document Signing Certificates: Dedicated certificates for creating trusted signatures using secure USB tokens or HSMs.
- Entrust Identity as a Service: Our managed service offering empowers you with trusted identity management for workforces, consumers, and citizens through phishing-resistant multi-factor authentication.
- nShield HSMs: Our secure hardware solutions for creating and storing cryptographic keys, digital signatures, and more.
With our industry-leading and high-assurance digital signature technology, based on global security standards, you can leverage Entrust as your go-to source of digital signing expertise. Our team stands at the forefront of PKI, HSMs, and identity verification so that we can offer you the solutions you need to navigate the threat landscape with ease.