What is a digital signature?
A digital signature is a mathematical technique used to validate the authenticity and integrity of a digital document, message or software. 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 U.S., 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 Rivest-Shamir-Adleman, or RSA -- 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. For encryption and decryption, the person who creates the digital signature uses a private key to encrypt signature-related data. 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 indicates there's a problem with the document or the signature. This is how digital signatures are authenticated.
Digital certificates, also called public key certificates, are used to verify that the public key belongs to the issuer. Digital certificates contain the public key, information about its owner, expiration dates and the digital signature of the certificate's issuer. Digital certificates are issued by trusted third-party certificate authorities (CAs), such as DocuSign or GlobalSign, for example. The party sending the document and the person signing it must agree to use a given CA.
Digital signature technology requires all parties trust that the person who creates the signature image 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?
Digital signatures offer the following benefits:
Security. Security capabilities are embedded in digital signatures to ensure a legal document isn't altered and signatures are legitimate. Security features include asymmetric cryptography, personal identification numbers (PINs), checksums and cyclic redundancy checks (CRCs), as well as CA and trust service provider (TSP) validation.
Timestamping. This provides the date and time of a digital signature and 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. With digital signatures becoming an international standard, more countries are accepting them 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, time, personnel and office space used to manage and transport documents.
Positive environmental effects. 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 businesses. With everything recorded and stored digitally, there are fewer opportunities for a manual signee or record-keeper to make a mistake or misplace something.
Classes and types of digital signatures
There are three different classes of digital signature certificates (DSCs) as follows:
Class 1. This type of DSC can't be used for legal business documents, as they're 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. These DSCs are often used for electronic filing (e-filing) of tax documents, including income tax returns and goods and services tax 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 people or organizations to present in front of a CA to prove their identity before signing. Class 3 digital signatures are used for e-auctions, e-tendering, e-ticketing and court filings, as well as in other environments where threats to data or the consequences of a security failure are high.
Uses for digital signatures
Digital signature tools and services are commonly used in contract-heavy industries, including the following:
Government. The U.S. Government Publishing Office publishes electronic versions of budgets, public and private laws, and congressional bills with digital signatures. Governments worldwide use digital signatures for processing tax returns, verifying business-to-government 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 identify their citizens and employees. These are physical cards with an embedded chip that contains a digital signature that provides 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, strengthen data security, e-prescribe and process hospital admissions. The use of digital signatures in healthcare must comply with the Health Insurance Portability and Accountability Act of 1996.
Manufacturing. Manufacturing companies use digital signatures to speed up processes, including product design, quality assurance, manufacturing enhancements, marketing and sales. The use of digital signatures in manufacturing is governed by the International Organization for Standardization and the National Institute of Standards and Technology Digital Manufacturing Certificate.
Financial services. The U.S. financial sector uses digital signatures for contracts, paperless banking, loan processing, insurance documentation and mortgages. This heavily regulated sector uses digital signatures, paying 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 regulations, the Consumer Financial Protection Bureau and the Federal Financial Institutions Examination Council.
Cryptocurrencies. Bitcoin and other cryptocurrencies use digital signatures to authenticate the blockchain. They're 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.
Non-fungible tokens (NFTs). Digital signatures are used with digital assets -- such as artwork, music and videos -- to secure and trace these types of NFTs anywhere on the blockchain.
Why use PKI or PGP with digital signatures?
Digital signatures use the PKI standard and the Pretty Good Privacy (PGP) encryption program, as 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 whom 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. It's a type of electronic signature. The term electronic signature, or e-signature, is a legal term that's defined legislatively.
For example, in the U.S., the E-Sign Act passed in 2000 defined e-signature as "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 electronic identification authentication and trust services, or eIDAS, which regulates e-signatures and transactions, as well as 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 a signature online, like the signer's name being entered in a web browser on a form.
To be considered valid, e-signature schemes must include the following three things:
A way to verify the identity of the entity signing it.
A way to verify the signing entity intended to affirm the document being signed.
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.
The digital signature only authenticates if the signed data -- for example, a document or representation of a document -- is unchanged. If a document is altered after being signed, the digital signature fails to authenticate.
While authenticated digital signatures provide cryptographic proof a document was signed by the stated entity and that the document hasn't been altered, not all e-signatures provide the same guarantees.
Digital signature security
Security is the main benefit of using digital signatures. Security features and methods used in digital signatures include the following:
PINs, passwords and codes. These are 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. This employs a public key algorithm that includes private and public key encryption and authentication.
Checksum. This long string of letters and numbers is used to determine the authenticity of transmitted data. A checksum is the result of running a cryptographic hash function on a piece of data. The value of the original checksum file is compared against the checksum value of the calculated file to detect errors or changes. A checksum acts like a data fingerprint.
CRC. A type of checksum, this error-detecting code and verification feature is used in digital networks and storage devices to detect changes to raw data.
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.
TSP validation. This person or legal entity validates a digital signature on a company's behalf and offers signature validation reports.
Digital signature attacks
Possible attacks on digital signatures include the following:
Chosen-message attack. The attacker either obtains the victim's public key or tricks the victim into digitally signing a document they don't intend to sign.
Known-message attack. The attacker obtains messages the victim sent and a key that enables the attacker to forge the victim's signature on documents.
Key-only attack. The attacker only has access to the victim's public key and can re-create the victim's signature to digitally sign documents or messages that the victim doesn't intend to sign.