As businesses embrace the paperless trend and shift towards virtual documents, the need for an effective electronic signature process continues to rise. The two most common types of signatures are electronic signatures and digital signatures.
Although both types of signatures help verify the signing parties, there are some noteworthy distinctions found in the characteristics and security of each.
Characteristics of Electronic Signatures
Electronic signatures are a quick and cost-effective way to sign documents remotely. As the use of electronic signatures rises, so do the characteristics and the number of features they provide.
Simple electronic signature software allows users to input their names electronically using a touchpad, stylus, or mouse. The software will then transform the writing into an electronic signature and attach it to the document file.
More advanced electronic signature software will, in addition, trace user interaction and create a signing log of the signature process including e.g. the email address, name, date and signature, IP address during signing, time and date of the signature as well as the hash code of the signed document to improve traceability and security.
As a result of the ESign act of 2000, all electronic signatures are legally binding in many countries and can even act as evidence in court.
Electronic signatures streamline the process of finalizing administrative changes, authorizing invoices, and accepting deliveries. Electronic signatures work for any document, including PDFs, Word documents, and Excel spreadsheets.
Characteristics of Digital Signatures
Digital signatures are a type of signature built through an RSA algorithm that creates unique components, Public Key Infrastructure, and a Certificate Authority to verify the signer.
Unlike an electronic signature which is a simple image, there are multiple components of a digital signature. First and foremost are the public and private keys. The private key is unique and is distributed only to the signer. The public key can be given to anyone and is used to verify that the signature was created using the corresponding private key.
A hash algorithm is another main component of a digital signature, as it produces a unique code or fingerprint called a digest that corresponds to the digital document. After creation, the digest is encrypted with the private key to create the digital signature.
Once encrypted, the digital signature is then appended to the document and can be verified using the public key. The detailed verification process and multiple components ensure that the original document has not been tampered with and that the signature belongs to the signer.
Another essential characteristic of all digital signatures is the Public Key Infrastructure (PKI). The Public Key Infrastructure (PKI) is a system that issues, validates, and revokes digital certificates.
The final characteristic to be aware of is a Certificate Authority (CA). A Certificate Authority is a third-party organization that validates the signer’s identity and distributes the public key, private key, and digital document used to create the digital signature.
Differences Between an Electronic Signature and a Digital Signature
Overall, both signature types have the same purpose: to provide a secure and legal way to sign documents remotely. However, the two main differences come in their uses and infrastructure.
Electronic signatures are used for documents that require a lower level of security. While the signature is legally binding, there should be a level of trust established between the two parties.
Digital signatures instantly create verifiable relationships between two parties anywhere in the world and provide an even higher level of security.
The other main difference is how each signature works. Electronic signatures are rudimentary and only scan an image of your physical or digital signature before placing it on the document. While this method is quick, it is vulnerable to forgery.
Digital signatures, on the other hand, rely on complex mathematical algorithms to create a unique code that corresponds to the document.
Which is More Secure – an Electronic Signature or a Digital Signature?
Digital signatures use public key cryptography, also known as asymmetric cryptography. With asymmetric cryptography, two keys are involved in the signature process – a private key known only to the signer and a public key made available to anyone.
The private key is combined with a document and hash algorithm to generate the digital signature, and the public key is used to access and verify it. Asymmetric cryptography provides a higher level of security, as it would be challenging for someone to forge a digital signature without access to the signer’s private key.
In contrast, electronic signatures don’t use cryptography and certificates. Electronic signatures are a substitute for handwritten signatures and primarily serve as a demonstration of intent to create a legally binding relationship during an electronic transaction instead of functioning as a method to secure a document’s integrity and prevent its tampering.
Benefits of Digital Signatures
Digital signatures offer several great benefits, including:
Digital signatures verify a signer’s identity and origin. Verifying data integrity makes digital signatures much more secure than electronic signatures, as they are linked to an authorized digital certificate.
Digital signatures use authentication protocols to verify the identity of the signer. Each digital signature contains keys distributed by PKI and CA’s that authorize the signer and creates the digital signature.
Non-repudiation is another benefit of digital signatures. With non-repudiation, signers cannot later deny having signed the document. Non-repudiation acts as proof because the private key used to generate the signature is traceable back to the signer.
Drawbacks of Digital Signatures
The primary drawback of digital signatures is that they are limited to a single digital document. Each digital signature binds to a unique online document, hash algorithm, private key, and public key.
Another drawback of digital signatures is that they are significantly more complex and can take longer to create than electronic signatures. There are multiple steps in creating a digital signature and waiting on a Certificate Authority to verify the signature can be a slow process.
Benefits of Electronic Signatures
Electronic signatures offer several great benefits, including:
Electronic signatures are very convenient, making them a suitable choice for busy individuals. They require no extra steps on the singer’s part, and the signer can complete the document using any device they choose.
All electronic signatures are legally binding, making them ideal when you are drawing up a contract and need a quick and legally binding way to sign the document.
Better Work Experience
Electronic signatures make it easy to sign documents and track the status of signings, which can save a lot of time and hassle for businesses that do a lot of electronic filing.
What are the Biggest Problems with Electronic Signatures?
While electronic signatures are convenient and legally binding, they have some drawbacks.
Hard to Verify
Verifying the signer’s identity can be challenging when using an electronic signature. Electronic signatures do not always contain hash algorithms, public & private keys, and other authentication methods, which makes electronic signatures harder to verify.
Risk of Unauthorized Signing
Not only are electronic signatures harder to verify, but they are also susceptible to unauthorized signing. Fraudsters can use a photo of your signature or even forge it by hand to sign documents without your permission.
Businesses continue to leverage online applications to streamline administrative workflow and improve customer experience. As the prevalence of e-commerce grows, the importance of electronic signatures and digital signatures will also continue to increase.
Be mindful of the differences. In short, digital signatures offer a higher level of security than electronic signatures. With the Public Key Infrastructure and a Certificate Authority, digital signatures bind the signer’s identity to the document.
Electronic signatures do not typically provide this level of assurance, but they are a far more convenient solution that is still secure and legally binding. We suggest using electronic signatures and digital signatures, with the optimal choice depending on the document. If it requires a quick signature, use electronic. If it is a high-value transaction where identity verification is essential, use a digital signature.