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As business documents have transitioned into electronic forms, signatures have evolved from ink to electronic...
Electronic and digital signature technologies sound similar, but they differ in several ways. A digital signature is a type of e-signature, suitable to securely do business in the digital age. All digital signatures are electronic, but not all electronic signatures are digital.
What is an electronic signature?
An electronic signature mimics a wet signature, or any signature on a hard copy. E-signatures make electronic marks that indicate agreement with or acknowledgment of a contract's terms. Biometrics, such as retina scans and thumbprints, are also e-signatures. They have the same legal standing for identity, authenticity and nonrepudiation as handwritten signatures since the E-Sign Act went into effect in October 2000.
Before the bill, telegraph and wire services provided e-signatures for business documents from 1845 until the 1980s, with the arrival of fax machines and PIN pads. Parties that send and receive documents make private arrangements -- rather than using digital technologies -- to certify senders' and receivers' identities and document integrity.
What is a digital signature?
A digital signature digitizes an e-signature's legal standing and verification. Digital technologies, rather than private arrangements, certify senders' and receivers' identities and document integrity. Digitally signed documents create records of agreements and generate their own audit trails, so organizations can efficiently maintain, trace and verify digital signatures.
Digital signatures rely on cryptographic technologies to ensure authentication, nonrepudiation and document integrity. They use a system of processes and messages to securely transmit data about parties' identities and document contents. These signatures rely on public keys, private keys and digital certificates -- though they may rely on blockchain technologies in the future.
Additionally, digital signatures can easily integrate into business processes. In particular, e-commerce and digitized contracting, where transactions take place in completely digital forms, can benefit from digital signature technology.
3 differences between electronic and digital signatures
Electronic and digital signatures have three key differences: trust, infrastructure and use cases.
- Trust. An e-signature replicates a wet signature's capabilities. Its authenticity depends on trusting the person or process that creates it. A digital signature, by comparison, authenticates signers' identities and relies on multiple technologies to create trusted and verifiable relationships.
- Infrastructure. An e-signature meets the minimum requirements for sealing a deal and business transactions. It makes no assumption about an enterprise's security infrastructure and offers simple implementation. A digital signature adds additional layers of security and enables zero trust. The signature must authenticate all involved parties through a public key infrastructure or other advanced security technologies. Organizations can verify, trace and audit digital signatures. The documents are secure, but added security has upfront costs to enroll and manage ongoing transactions.
- Use cases. E-signatures suit one-time agreements, as they don't require any type of enrollment. Digital signatures require enrollment, so they better suit organizations or teams making multiple or ongoing agreements.