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Home»Blockchain»What is a Digital Signature?
What is Digital Signature?
Blockchain

What is a Digital Signature?

Sheikh OwnBy Sheikh Own09/03/2022No Comments9 Mins Read
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A digital signature is like an ‘e-signature’ supported by a digital certificate. They have a coded message which associates the signer with a document in a recorded transaction. They are different for each individual, just like handwritten signatures. Digital signatures are trending everywhere because they improve the transparency of any business that works on online interactions and develops a level of trust and confidence among customers.

What is Digital Signature?

A digital signature is a type of e-signature, and it uses a mathematical algorithm to validate the authenticity of a message. The message can be in any form, like email, online transactions, or a digital document. They are like visual fingerprints that are unique to every user and are used for identifying and protecting information.

Digital Signatures are safer than any other forms of e-signatures. People use them because they are confident that the message was not changed intentionally or unintentionally. They do this by producing a unique hash for every message and then sending the user a private key for encryption. The hash generated by the digital signature is unique for each message; modifying any part of it will completely change the hash.

They are usually used for data authentication, data integrity, and people disowning data.

How does it Work?

They are also unique for each user, just like handwritten signatures. They use a particular coding system called PKI. It requires the provider to use a mathematical algorithm to generate two long numbers. They are called private keys and public keys.

The first step in digital signing is hashing the data. When somebody signs a digital document electronically, the signature is produced using that person’s private key. A mathematical algorithm creates a hash by matching the data with a signed document and encrypting it. A digital signature is that encrypted data produced by the hash. Hashes are always of the same size, irrespective of the size of data.

Unlike handwritten signatures, which are the same for every kind of data, every digital signature is related to the content of the data. So every digitally signed data will have a different signature.

This signature is also stamped with the time when the document was signed. If any modification occurs in that document after that time, it is considered invalid.

To protect the signature, PKI requires the services of credible Certification Authorities. They want keys to be produced in a secured and saved manner and should meet the requirements of certification authorities for safe digital signing.

What’s the Difference Between Digital Signature and an e-signature?

These terms are often used interchangeably and are confused with each other. Digital signatures are a form of e-signatures but not every e-signature is a digital one. Both digital signatures and e-signatures allow users to sign the documents and authenticate them. But the difference comes in the difference of purpose, geographical locations, and legal value of digital signatures versus other types of e-signatures.

A digital signature is usually used to protect the documents, while an e-signature is associated with a contract that a signer agrees to.

Features of Digital Signatures:

They are like fingerprints unique to each user for a document or a message. It helps to verify the authenticity of a document to determine if it has been modified since the time it was signed or not.

Another main feature of a digital signature is that it is used for the protection of documents. With the increased use of digital documents, scammers can easily forge documents using an e-signature. But with a digital signature, only the authorized person can modify a document.

Digital signatures confirm the identity of the signer by bounding a digital certificate to the signed document in a unique fingerprint.

Features of e-sigantures:

The main feature of an electronic signature is the intention of the signer. An electronic signature can be a mouse click, oral, or any electronic authorization. An electronic signature has many types. It is legally binding when two or more two parties decide to enter into a contract. It acts in accordance with contracts and agreements between two parties.

With the increasing demand for the world going digital, an electronic signature is just easier to incorporate nowadays. They are also used to execute an agreement. You can use an electronic signature when two parties decide to come together for a contract. If they both sign it they are legally bound to the contract then.

An electronic signature makes the whole process secure. Once two parties sign it, they can easily be identified. It also helps to verify the authenticity of a document. It is not only a handwritten signature, but it can also be a pin code, password, sound, symbol, or any other form of expression.

How Can you Create a Digital Signature?

For a digital signature, first, you need a digital certificate from a well-reputed third-party certificate authority. You can also create your own digital certificate if you don’t want to buy it from a third party. They are very important because they make the authentication of digital information from digital signatures possible.

Some software like DocuSign offers an interface to their users for signing documents online. It works with trusted Certificate Authorities to provide a transparent and easy process for its users.

The certificate authorities have some restrictions to whom you can send your documents and in which order you want to send them. Different certificate authorities have different guidelines and set of rules which you have to follow if you use them. You have to fulfill all of their requirements and provide some specific information in order to use the digital signature by filling out a form online.

Advantages of Using a Digital Signature

Digital signatures are already being used by many people and organizations and their demand is increasing day by day. Because of the advantages, the traditional signature system is seldom practiced in the digital world nowadays.

Faster Transactions

Digital signature makes it really easy to process any transaction or even the signing of any contract or documents from multiple companies. It makes the whole process easier by eliminating the hurdles which come in the way when using the traditional ink signing method.

Enhanced Security

When it comes to the protection of digital documents, digital signatures are far better than conventional ones. It makes encryption possible by working with the software. The document is saved from modification and forgery because of this advanced protection.

Customer Satisfaction

With the world going online, most businesses are conducted online or are shifting to an online platform. This also means that customers expect digital signing and related services will be provided by the businesses. Customers want the whole process to be smooth, yet maintain the security and trust level.

Authenticity

Another advantage of a digital signature is that its authenticity cannot be questioned. It can stand in any court of law where the digital certificate is applicable. Moreover, time stamping and the ability to archive documents improve.

Disadvantages of Digital Signature

Digital signatures have their share of some disadvantages along with a bunch of advantages. They may lose their functionality if the technology behind them changes. The digital world is highly volatile and keeps shifting. Any glitch in its functionality can cause it to lose its credibility.

If the algorithms behind digital signing are highly developed but cannot be implemented properly they would be of no use. The correct implementation is very necessary for its functionality.

The verification software and digital certificates which users have to buy to use digital signatures are quite expensive. The rules and regulations of every digital certificate are different and can cause confusion among users.

Digital Signing in Cryptocurrency

In the blockchain domain, digital signatures are utilized to sign and authorize cryptocurrency transactions. They are specifically important for Bitcoin because the signatures make sure that coins can only be used by the individuals that possess the associated private keys. The private key is used to sign the transaction while its associated public key aids in validating the sender.

You don’t have to show your private key with a digital signature but have to show proof, to spend your Bitcoins or make any transactions. It also makes sure that the transaction cannot be changed after it has been signed digitally.

Where Can Digital Signatures be Used?

In this age of the digital world, they can be used in every system that is digitalized as long as employees have proper guidance. They can be used with different types of digital documents and certificates. Following are the places where they are used most commonly:

IT: They are applied in Information Technology to increase the security of communication systems used over the internet.

Cryptocurrency: When used in the crypto world, they make sure that only the legal owner of cryptocurrencies will be allowed to sign a transaction or transfer his funds.

e-Commerce: Digital signatures speed up businesses because they can share bills, receipts, and transaction-related details quickly and improves customer satisfaction.

Heath-care Organization: With digital signatures, the paperwork system of hospitals has been revolutionized. There is improved security and patients can now fill and sign the forms from the ease of their homes.

In a Nutshell

Digital and electronic signatures are both being practiced for quite some time now, but there is still a lot of room for improvement and making more widespread. Many organizations and businesses are still using the traditional ink signing system. While the world is shifting to a more digitalized system, employing a digital signing system will make things efficient and quick. When implemented properly, digital signing can help improve the security, data integrity, and validation of data.

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Sheikh Own
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Day trader crypto freak writing for tech and crypto news websites. Sharing is knowledge and helping others to get familiar with blockchain industry.

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