What is a digital signature: The benefits and how it works?
Gone are the days of handwritten signatures. The world of signatures are going digital. Here’s your quick guide of all you need to know about signing contracts digitally.
What, why, how?
Digital signatures and electronic signatures are sometimes used interchangeably, which is a common mistake. Think of digital signatures as the technique by which the signature is applied and electronic signatures as the type of signature.
Most electronic signatures today are done using a digital signature, but they don’t have to be. For example, writing your signature on a computer with a mouse or stylus is an electronic signature, but not a digital one. It is like how signing with an ink pen on paper and signing with chalk on a blackboard are both handwritten signatures, but most likely only the first will have legal standing as a “written signature”.
So what are digital signatures? A digital signature is a mathematical technique used to guarantee the authorship and integrity of a message or piece of data. Any kind of data. For us it’s contracts, but it could just as well be an email or a bank transaction.
So how is this actually done? The de facto standard for creating and validating digital signatures is called Public Key Infrastructure (PKI). In PKI a private key is used to sign the message and a public key is used to validate the signature. A certificate issued by a trusted third party, called a Certificate Authority (CA), is used as proof that the holder of the private key is who they say they are.
How digital signatures improve workflows
Digital signatures are not only more secure than traditional signatures, but they can also improve workflow efficiency. Here are some ways that digital signatures can benefit your workflow:
1. Faster document processing
Traditional signatures require printing, signing, scanning, and emailing or mailing documents, which can take a considerable amount of time. With digital signatures, you can sign documents instantly, reducing the time it takes to process documents.
2. Remote signing
Digital signatures allow you to sign documents from anywhere in the world, as long as you have an internet connection. This means that you don’t have to be physically present to sign documents, making it easier to complete transactions with clients and partners in different locations.
3. Automated workflows
Digital signatures can be integrated into automated workflows, streamlining document processing and reducing the risk of errors. Automated workflows can also send reminders to signers, ensuring that documents are signed in a timely manner.
4. Increased security
As previously mentioned, digital signatures are more secure than traditional signatures. They use encryption technology to verify the authenticity of the signer, making it difficult for forgers to create fraudulent signatures.
5. Reduced costs
They can reduce costs associated with printing, scanning, and mailing documents. They can also reduce the need for physical storage of documents, as they can be stored electronically.
Six reasons why we choose digital signing
Safe and secure
Even if electronic signatures are safe and secure, digital signatures are the safest and most secure way of signing in a digital world.
Uniquely yours
Your handwritten signature is yours and should be hard to copy. A digital signature is even more uniquely yours. Every signature contains identifying information unique to each signer.
Globally accepted
PKI-based digital signatures are standard for institutions, governments, and organizations around the world, reducing the need to reinvent the wheel.
Sign anywhere
Digital signatures as well as electronic signatures can be collected on any device, your phone, laptop, tablet, etc. You can safely and securely sign anywhere, at any time.
Easiest way to sign
Both digital signatures and electronic signatures are the most straightforward way to sign a document. Signing is as simple as a click or a tap on your screen.
Tamper proof
Once a document is signed with a digital signature, it’s sealed. Any changes made afterward will invalidate the original signature. You can be safe knowing that it’s exactly what you agreed to.
How different industries use digital signatures
Digital signatures are used in a variety of industries, including:
Real estate
They are commonly used in real estate transactions, as they can speed up the process of buying and selling properties. They also reduce the need for physical paperwork, making the process more efficient.
Healthcare
Digital signatures are used in healthcare to sign medical records, prescriptions, and other important documents. They help to ensure that patient information is secure and that records are accurate.
Banking
Digital signatures are used in banking to sign loan agreements, account openings, and other financial documents. They help to ensure that transactions are secure and that customer information is protected.
Legal
Digital signatures are legally binding in many countries, including the United States, the European Union, and Australia. They are commonly used in legal documents, such as contracts and agreements.
Education
Digital signatures are used in education to sign enrollment forms, transcripts, and other important documents. They help to ensure that student information is secure and that records are accurate.
Agree faster with digital signatures
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The differences between a digital signature and an electronic signature
| Digital signature | Electronic signature |
|---|---|
| Digital signature ensures the integrity and authorship of your contracts. | Electronic signature ensures the signature is connected to the signer. |
| Digital signature ensures your signed contracts are tamper-proof, preventing changes after they are signed. | Electronic signature indicates that there’s an intent of the signer to agree to the content as specified in the contract. |
| Digital signature is a method to guarantee integrity. | Electronic signature is a type of signature. |
| Digital signature is generated by software technology. | Electronic signature is generated by the signer either through a click of a button or a hand-drawn signature on an electronic device. |
Digital signing FAQs
How do digital signatures work?
Digital signatures work the same exact way that handwritten signatures do. They are unique to each person. Digital signatures adhere to the standard format of PKI. PKI states that the document provider, in this case, Oneflow, uses an algorithm to create a number sequence which are called keys. One public and one private key is created during each digital signature. The private key is used to sign, while the public key is used to verify.
Every time a person signs a document electronically, the signature is created using the signer’s private key. This is securely contained by the signer. During the signing process, the algorithm becomes the cipher with which it matches the data from the signer with the signed document, then encrypts it. The encrypted data is the digital signature. The signature is recorded with a date and time stamp for that document, and if any changes are made to the document after signing, the digital signature is no longer valid.
Maintaining the integrity of the digital signature is vitally important. According to the terms set out by PKI, the keys must be created, conducted, and saved in a secure manner that requires a reliable Certificate Authority. Oneflow meets all the PKI requirements for safe and secure digital signatures.
What is Public Key Infrastructure?
Public Key Infrastructure (PKI) is a set of policies and procedures that are needed to create, store and revoke digital signatures (along with other things). PKI is a facilitator when it comes to securing the electronic transfer of information such as digital signatures and other network activities. In this case, it binds the public key with the identities of people or organizations (i.e. their private key). The binding of this information is done due through a process of registration and issuance of certificates by a Certificate Authority (CA).
What is a Certificate Authority?
A certificate authority (CA) is an entity that stores, signs, and issues digital certificates. A digital certificate certifies the ownership of a public key. As digital signatures use both public and private keys, the CA acts as a trusted third party to verify the authenticity of a signed document. CAs are typically organizations that have been universally recognized as reliable for ensuring key security and are able to provide valid digital certificates. The CA must be agreed upon by both the entity sending the document and the recipient signing it.
Why would I use a digital signature?
You would use a digital signature for a myriad of reasons. To sign a contract, a document, agree to a set of terms and conditions etc. Especially in the post covid period, a written signature is harder and more difficult to acquire. As such, many countries and global regions have established e-signature standards based on existing digital signature technology. It does refer to local standards, but working with a PKI and a trusted CA ensures that the digital signature is enforceable and accepted in each local market. It also ensures that digital signatures use an international and widely accepted standard technology that prevents forgery or changes to a document after it has been signed.
Can digital signatures be copied?
Short answer. No. It is not possible to copy a digital signature.
Long answer. Also no. Understanding digital signatures should elaborate this more: A digital signature is a mathematical technique used to guarantee the authorship and integrity of a message or a piece of data. It could be any kind of data. When it comes to Oneflow, it’s contracts But it could be anything else that requires verification, such as verifying an email, or signing a form to pick up a package.
Can digital signatures be edited?
Again, no. Digital signatures have a secure system in place to ensure accuracy and prevent forgery from occurring. This is again due to them using industry-standard PKI and a Certificate Authority.
