digital signature

Contributor(s): Vicki-lynn Brunskill, Peter Loshin and Michael Cobb

A digital signature is a mathematical technique used to validate the authenticity and integrity of a message, software or digital document. As the digital equivalent of a handwritten signature or stamped seal, a digital signature offers far more inherent security, and it is intended to solve the problem of tampering and impersonation in digital communications.

Digital signatures can provide the added assurances of evidence of origin, identity and status of an electronic document, transaction or message and can acknowledge informed consent by the signer.

In many countries, including the United States, digital signatures are considered legally binding in the same way as traditional document signatures.

How digital signatures work

Digital signatures are based on public key cryptography, also known as asymmetric cryptography. Using a public key algorithm, such as RSA, one can generate two keys that are mathematically linked: one private and one public. 

Digital signatures work through public key cryptography's two mutually-authenticating cryptographic keys. The individual who is creating the digital signature uses their own private key to encrypt signature-related data; the only way to decrypt that data is with the signer's public key. This is how digital signatures are authenticated.

Digital signature technology requires all the parties to trust that the individual creating the signature has been able to keep their own private key secret. If someone else has access to the signer's private key, that party could create fraudulent digital signatures in the name of the private key holder.

How to create a digital signature

To create a digital signature, signing software -- such as an email program -- creates a one-way hash of the electronic data to be signed. The private key is then used to encrypt the hash. The encrypted hash -- along with other information, such as the hashing algorithm -- is the digital signature.

The reason for encrypting the hash instead of the entire message or document is that a hash function can convert an arbitrary input into a fixed length value, which is usually much shorter. This saves time as hashing is much faster than signing.

The value of a hash is unique to the hashed data. Any change in the data, even a change in a single character, will result in a different value. This attribute enables others to validate the integrity of the data by using the signer's public key to decrypt the hash.

If the decrypted hash matches a second computed hash of the same data, it proves that the data hasn't changed since it was signed. If the two hashes don't match, the data has either been tampered with in some way -- a compromise to its integrity -- or the signature was created with a private key that doesn't correspond to the public key presented by the signer --an issue with authentication.

A digital signature can be used with any kind of message -- whether it is encrypted or not -- simply so the receiver can be sure of the sender's identity and that the message arrived intact. Digital signatures make it difficult for the signer to deny having signed something -- assuming their private key has not been compromised -- as the digital signature is unique to both the document and the signer and it binds them together. This property is called nonrepudiation.

Digital signatures are not to be confused with digital certificates. A digital certificate, an electronic document that contains the digital signature of the issuing certificate authority, binds together a public key with an identity and can be used to verify that a public key belongs to a particular person or entity.

Most modern email programs support the use of digital signatures and digital certificates, making it easy to sign any outgoing emails and validate digitally signed incoming messages. Digital signatures are also used extensively to provide proof of authenticity, data integrity and nonrepudiation of communications and transactions conducted over the internet.

Classes of digital signatures

There are three different classes of Digital Signature Certificates:

  • Class 1: Cannot be used for legal business documents as they are validated based only on an email ID and username. Class 1 signatures provide a basic level of security and are used in environments with a low risk of data compromise.
  • Class 2: Often used for e-filing of tax documents, including income tax returns and Goods and Services Tax (GST) returns. Class 2 digital signatures authenticate a signee’s identity against a pre-verified database. Class 2 digital signatures are used in environments where the risks and consequences of data compromise are moderate.
  • Class 3: The highest level of digital signatures. Class 3 signatures require a person or organization to present in front of a certifying authority to prove their identity before signing. Class 3 digital signatures are used for e-auctions, e-tendering, e-ticketing, court filings and in other environments where threats to data or the consequences of a security failure are high.

Uses of digital signatures

Industries use digital signature technology to streamline processes and improve document integrity. Industries that use digital signatures include:

Government - The U.S. Government Publishing Office publishes electronic versions of budgets, public and private laws and congressional bills with digital signatures. Digital signatures are used by governments worldwide for a variety of uses, including processing tax returns, verifying business-to-government (B2G) transactions, ratifying laws and managing contracts. Most government entities must adhere to strict laws, regulations and standards when using digital signatures.

Healthcare - Digital signatures are used in the healthcare industry to improve the efficiency of treatment and administrative processes, to strengthen data security, for e-prescribing and hospital admissions. The use of digital signatures in healthcare must comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Manufacturing - Manufacturing companies use digital signatures to speed up processes, including product design, quality assurance (QA), manufacturing enhancements, marketing and sales. The use of digital signatures in manufacturing is governed by the International Organization for Standardization (ISO) and the National Institute of Standards and Technology (NIST) Digital Manufacturing Certificate (DMC).

Financial services - The U.S. financial sector uses digital signatures for contracts, paperless banking, loan processing, insurance documentation, mortgages, and more. This heavily regulated sector uses digital signatures with careful attention to the regulations and guidance put forth by the Electronic Signatures in Global and National Commerce Act (E-Sign Act), state UETA regulations, the Consumer Financial Protection Bureau (CFPB) and the Federal Financial Institutions Examination Council (FFIEC).

Digital signature vs. electronic signature

Though the two terms sound similar, digital signatures are different from electronic signatures.  While digital signature is a technical term, defining the result of a cryptographic process that can be used to authenticate a sequence of data, the term electronic signature -- or e-signature -- is a legal term that is defined legislatively.

For example, in the United States, the term was defined in the Electronic Signatures in Global and National Commerce Act, passed in 2000, as meaning "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."

This means that a digital signature -- which can be expressed digitally in electronic form and associated with the representation of a record -- can be a type of electronic signature. More generally though, an electronic signature can be as simple as the signer's name being entered on a form on a webpage.

To be considered valid, electronic signature schemes must include three things:

  • a way to verify the identity of the entity signing it;
  • a way to verify that the signing entity intended to affirm the document being signed; and
  • a way to verify that the electronic signature is indeed associated with the signed document.

A digital signature can, on its own, fulfill these requirements to serve as an electronic signature:

  • the public key of the digital signature is linked to the signing entity's identification;
  • the digital signature can only be affixed by the holder of the public key's associated private key, which implies the entity intends to use it for the signature; and
  • the digital signature will only authenticate if the signed data -- document or representation of a document -- is unchanged. If a document is altered after being signed, the digital signature will fail to authenticate.

While authenticated digital signatures provide cryptographic proof that a document was signed by the stated entity and that the document has not been altered, not all electronic signatures can provide the same guarantees.

Digital signature security features and benefits

Security features embedded in digital signatures ensure that a document is not altered and that signatures are legitimate. Security features and methods used in digital signatures include:

  • PINs, passwords and codes: Used to authenticate and verify a signee’s identity and approve their signature. Email, username and password are most common.
  • Time stamping: Provides the date and time of a signature. Time stamping is useful when the timing of a digital signature is critical, such as stock trades, lottery ticket issuance and legal proceedings.
  • Asymmetric cryptography: Employs a public key algorithm that includes private and public key encryption/authentication.
  • Checksum: A long string of letters and numbers that represent the sum of the correct digits in a piece of digital data, against which comparisons can be made to detect errors or changes. Checksum acts as a data fingerprint.
  • Cyclic Redundancy Checking (CRC): An error-detecting code and verification feature used in digital networks and storage devices to detect changes to raw data.
  • Certificate authority (CA) validation: CAs issue digital signatures and act as a trusted third party by accepting, authenticating, issuing and maintaining digital certificates. The use of CAs helps avoid the creation of fake digital certificates.
  • Trust Service Provider (TSP) validation: A TSP is a person or legal entity that performs validation of a digital signature on a company’s behalf and offers signature validation reports.
This was last updated in April 2020

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