Definition

digital signature

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

Digital signatures can provide evidence of origin, identity and status of electronic documents, transactions or digital messages. Signers can also use them to acknowledge informed consent.

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

How do digital signatures work?

Digital signatures are based on public key cryptography, also known as asymmetric cryptography. Using a public key algorithm, such as RSA (Rivest-Shamir-Adleman), two keys are generated, creating a mathematically linked pair of keys, one private and one public.

Digital signatures work through public key cryptography's two mutually authenticating cryptographic keys. The individual who creates the digital signature uses a private key to encrypt signature-related data, while the only way to decrypt that data is with the signer's public key.

If the recipient can't open the document with the signer's public key, that's a sign there's a problem with the document or the signature. This is how digital signatures are authenticated.

Digital signature technology requires all parties trust that the individual creating the signature has kept the private key secret. If someone else has access to the private signing key, that party could create fraudulent digital signatures in the name of the private key holder.

What are the benefits of digital signatures?

Security is the main benefit of digital signatures. Security capabilities embedded in digital signatures ensure a document is not altered and signatures are legitimate. Security features and methods used in digital signatures include the following:

  • Personal identification numbers (PINs), passwords and codes. Used to authenticate and verify a signer's identity and approve their signature. Email, username and password are the most common methods used.
  • Asymmetric cryptography. Employs a public key algorithm that includes private and public key encryption and authentication.
  • Checksum. A long string of letters and numbers that represents the sum of the correct digits in a piece of digital data, against which comparisons can be made to detect errors or changes. A checksum acts as a data fingerprint.
  • Cyclic redundancy check (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 trusted third parties 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.

Other benefits to using digital signatures include the following:

  • Timestamping. By providing the data and time of a digital signature, timestamping is useful when timing is critical, such as for stock trades, lottery ticket issuance and legal proceedings.
  • Globally accepted and legally compliant. The public key infrastructure (PKI) standard ensures vendor-generated keys are made and stored securely. Because of the international standard, a growing number of countries are accepting digital signatures as legally binding.
  • Time savings. Digital signatures simplify the time-consuming processes of physical document signing, storage and exchange, enabling businesses to quickly access and sign documents.
  • Cost savings. Organizations can go paperless and save money previously spent on the physical resources and on the time, personnel and office space used to manage and transport them.
  • Positive environmental impact. Reducing paper use also cuts down on the physical waste generated by paper and the negative environmental impact of transporting paper documents.
  • Traceability. Digital signatures create an audit trail that makes internal record-keeping easier for business. With everything recorded and stored digitally, there are fewer opportunities for a manual signee or record-keeper to make a mistake or misplace something.

How do you create a digital signature?

To create a digital signature, signing software, such as an email program, is used to provide a one-way hash of the electronic data to be signed.

A hash is a fixed-length string of letters and numbers generated by an algorithm. The digital signature creator's 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 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 use the signer's public key to decrypt the hash to validate the integrity of the data.

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 and is compromised 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.

How digital signatures work
A person creates a digital signature using a private key to encrypt the signature. At the same time, hash data is created and encrypted. The recipient uses the signer's public key to decrypt the signature.

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 the message arrived intact. Digital signatures make it difficult for the signer to deny having signed something 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 is an electronic document that contains the digital signature of the issuing CA. It 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 and types of digital signatures

There are three different classes of digital signature certificates (DSCs):

  • 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 electronic filing (e-filing) of tax documents, including income tax returns and goods and services tax (GST) returns. Class 2 digital signatures authenticate a signer'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 for digital signatures

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

  • Government. The U.S. Government Publishing Office (GPO) 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 reasons, 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. Many governments and corporations also use smart cards to ID their citizens and employees. These are physical cards endowed with a digital signature that can be used to give the cardholder access to an institution's systems or physical buildings.
  • 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 (HIPAA) of 1996.
  • 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 Uniform Electronic Transactions Act (UETA) regulations, the Consumer Financial Protection Bureau (CFPB) and the Federal Financial Institutions Examination Council (FFIEC).
  • Cryptocurrencies. Digital signatures are also used in bitcoin and other cryptocurrencies to authenticate the blockchain. They are also used to manage transaction data associated with cryptocurrency and as a way for users to show ownership of currency or their participation in a transaction.

Why use PKI or PGP with digital signatures?

Digital signatures use the PKI standard and the Pretty Good Privacy (PGP) encryption program because both reduce potential security issues that come with transmitting public keys. They validate that the sender's public key belongs to that individual and verify the sender's identity.

PKI is a framework for services that generate, distribute, control and account for public key certificates. PGP is a variation of the PKI standard that uses symmetric key and public key cryptography, but it differs in how it binds public keys to user identities. PKI uses CAs to validate and bind a user identity with a digital certificate, whereas PGP uses a web of trust. Users of PGP choose who they trust and which identities get vetted. PKI users defer to trusted CAs.

The effectiveness of a digital signature's security is dependent on the strength of the private key security. Without PKI or PGP, it's impossible to prove someone's identity or revoke a compromised key, and it's easier for malicious actors to impersonate people.

What's the difference between a digital signature and an electronic signature?

Though the two terms sound similar, digital signatures are different from electronic signatures. Digital signature is a technical term, defining the result of a cryptographic process or mathematical algorithm 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 E-Sign Act, passed in 2000, defined e-signature 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."

E-signatures are also defined in the Electronic Signatures Directive, which the European Union (EU) passed in 1999 and repealed in 2016. It regarded them as equivalent to physical signatures. This act was replaced with eIDAS (electronic identification authentication and trust services), which regulates e-signatures and transactions, and the embedding processes that ensure the safe conduct of online business.

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 e-signature. More generally, though, an e-signature can be as simple as the signer's name being entered on a form on a webpage.

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

  1. a way to verify the identity of the entity signing it;
  2. a way to verify the signing entity intended to affirm the document being signed; and
  3. a way to verify that the e-signature is associated with the signed document.

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

  • the public key of the digital signature is linked to the signing entity's electronic 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, i.e., 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 a document was signed by the stated entity and the document has not been altered, not all e-signatures provide the same guarantees.

digital signature vs. electronic signature
Learn how digital signatures and electronic signatures compare.

Digital signature tools and vendors

Digital signature tools and services are commonly used in contract-heavy industries. For example, when freelance writers sign a contract, they can agree to word count and payment, using Adobe Sign to put their e-signature on the document.

Digital and e-signature service providers include the following:

  • Adobe Sign is designed to provide secure, legal e-signatures across all device types.
  • DocuSign standards-based services ensure e-signatures are compliant with existing regulations. Its services include Express Signature for basic global transactions and the EU Qualified Signature, which complies with EU standards.
  • GlobalSign provides a host of management, integration and automation tools to implement PKI across enterprise environments.
  • SignEasy offers an e-signing service of the same name to businesses and individuals, as well as providing application programming interfaces (APIs) for developers.
  • SignNow, which is part of the airSlate business cloud, provides an easy-to-use Portable Document Format (PDF) signing tool for businesses.
  • Vasco provides its eSignLive e-signature product as a cloud service and on premises.
This was last updated in February 2021

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