Electronic Signature vs. Digital Signature: The Showdown

Since the ESIGN Act (Electronic Signatures in Global and National Commerce Act) was passed in 2000, electronic signatures are being rapidly adopted by businesses worldwide – so much so that 65% of enterprises are predicted to replace paper-based processes by the end of this year.

With the DTM (Digital Transaction Management) industry poised to grow into a $30-billion market by 2020, electronic signatures are likely to achieve mainstream adoption on a similar timeline. However, consumer awareness in the electronic signature space is limited in a number of ways. For example, the terms ‘electronic signature’ and ‘digital signature’ are often used interchangeably.

The Complete Guide to Electronic Signature Laws around the World

In an effort to set the record straight once and for all, in this blog post we will point out the important differences between these two types of signatures.

Electronic Signatures

What is an electronic signature?

According to the ESIGN Act, electronic signatures (also referred to as e-signatures) are 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.”

In other words, an electronic signature is equivalent to the digitized version of your handwritten signature, and can be used to indicate the intent to approve or accept the contents of a document.

What makes electronic signatures popular?

The biggest advantage offered by electronic signatures are that they are easy to use. They allow users to sign documents online with the click of a mouse, or trace their handwritten signature using a finger or a stylus directly onto a document.

Digital Signatures

What is a digital signature?

A digital signature refers to a category of electronic signature that leverages algorithms to generate a unique digital fingerprint (also known as a hash) unique to each document. This hash can be linked to the identity of the person who signed the document.

How do digital signatures work?

Digital signatures are usually created using the Public Key Infrastructure (PKI) system. These signature softwares leverage an algorithm to generate two keys (a sequence of numbers) – a private key and a public key, that are mathematically linked.

When a user signs a document online, he/she leverages the private key to create a signature. On a general basis, the private key remains under the sole control of the owner.

During the signing process, a crypto code ID is created and embedded into the document. At the time of verification, the signer simply uses his/her public key to unwrap the digital signature code and compare it with the document to ensure a match.

What makes digital signatures popular?

Digital signatures leverage cryptography to provide proof of the integrity and origin of each signature, thus providing for non-repudiation.

For an overview of the comparison between these two signatures, please see the table below.

Electronic SignaturesDigital Signatures

It uses a wide array of methods such as email, enterprise ID or phone verification, to authenticate signer identity.

It leverages certificate-based ID to authenticate signer identity.
It leverages an audit trail to demonstrate the proof of signing a document.It binds each signature to the document via encryption, to demonstrate the proof of signing.

Now that you know how different electronic and digital signatures are from each other, you will be able to make an informed decision on the kind of electronic signature software that best suits your business.

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