What is a digital signature?

What is a Digital Signature and How it Works

If you’ve recently begun the transition to a paperless office environment, or even if you’re just attempting to keep everyone safely distanced from each other during a pandemic, you’re no stranger to finding new ways to conduct business virtually.

While virtual meetings, collaborations, and conferences might not be what you’re used to, they’re not only the safer option; they’re the faster, more efficient option. In fact, if you’ve only been virtual during COVID, you may find you want to continue some of your digital business practices once the pandemic is over. 

Part of digital business and working in a paperless environment is working with documents that need reviews, approvals, and signatures that are no longer given with pen. The E-Sign Act of 2000 made the use of electronic signatures valid, and as such, it’s no longer necessary to sign some documents in person. Instead, you have the option to request documents be signed electronically. 

Even though electronic signatures have been in use since 2000, they haven’t gained as much popularity as they are currently experiencing mid-pandemic. The use of electronic signatures brings up many questions:

  • Are there different types of electronic signatures?
  • What documents can be signed electronically?
  • Are they safe?

There are numerous kinds of electronic signatures, many different documents that can be signed electronically (and some that cannot), and yes, they are generally safer than a signature signed in ink. 

In this article, we’ll aim to answer these questions, and go over a specific type of electronic signature, called a digital signature, explaining what it is and how it works.

What is a digital signature?

Digital signatures are a type of electronic signature that uses a series of personal identifications to verify the validity of the document and signer. Think of it like signing a document with something as individual (and unique) to you as your own fingerprint. 

Digital signature technology is the most intricate and complex of all electronic signature processes. A digital signature works by requiring both the sender and the signer to have their own personal and public “keys,” called personal key infrastructure, or “PKI’s.” 

Each person who signs the document accesses it and signs with their own private key. When they send the document back to the sender, they send it along with their public key. The recipient then uses the public key to decipher the private key, which determines the validity of the signature. 

Digital signatures also require the use of a security certificate by each party. These certificates are called certificates of authority, which can be costly for the sender and the signer. 

Digital signatures offer more security than a traditional electronic signature, but the additional security is rarely ever necessary for most documents. 

How does a digital signature work?

Digital signatures require specialized software and the use of certificates of authority by both the sending and receiving parties. Here’s a summary of how it works:

  1. The sender sends a document to a signer for them to sign electronically in the form of a digital signature. 
  1. The signer opens the document, and a specific record (or “hash”) is created. This is a mathematical algorithm that creates a personal identification specific to the user and ensures their identity. 
  1. The signer “signs” the document by using PKI technology and a certificate of authority. 
  1. The document is then sent back to the original sender with a public key that will be used to open and decipher the signer’s private key. If the public key cannot decipher the private key, the signature is not valid. 
  1. The sender receives the digitally signed document, uses the public key to open and decipher it, determine its validity, and accept it.

There’s a lot of computer hashing and algorithms that take place in between, and the entire process is more in-depth and costly than using other forms of electronic signatures that are still entirely safe. 

When would you use a digital signature?

Most companies that operate virtually don’t use digital signatures and opt instead for other secure electronic signatures. Digital signatures are mostly used by governmental authorities and some banking institutions. 

Additionally, digital signatures are sometimes required for transactions that occur between two different countries or agencies. 

How is a digital signature different from an Electronic Signature?

An electronic signature is simply a way for a document to be validated by an entity without the use of ink. 

Digital signatures are a form of electronic signature that requires a bit more legwork than a standard electronic signature. As such, they aren’t the most popular option in terms of ease of use. A standard electronic signature is very user-friendly and typically requires identity verification and then a point and click style for signing the document. 

Both methods of signing are safe and secure, with digital signatures requiring extra layers of safety that are most commonly used by governmental authorities and some banks. 

In terms of cost, a standard electronic signature is the way to go. Digital signatures require specialized software and require each party to have access to certificates of authority, which can also be costly. 

Before you get started with electronic and/or digital signatures, you should know that some documents cannot be signed electronically or digitally. Additionally, you may not need to expend the money for an electronic signature in the first place. Some documents simply need review and/or approval by another party before you proceed to the next step in the process. 

How Revv can help you automate document approval

If you’re considering using e-signatures for your document, you may be able to save time and cost by simply considering what your document actually needs in terms of review, consent, approval, or signature. 

For instance, if you’re still in the document drafting process and need review and consent from departments in-house before you can proceed, you don’t need to send your document digitally for electronic signature, you need to send it for in-house approval.

Revv can help you streamline this approval by creating in-house approval workflow systems that allow everyone to collaborate in one centralized workspace, offering comments, approvals, reviews, and consents without additional cost. 

Besides being able to configure automated approval workflows, you can manually send documents, both in-house and abroad, for acceptance. This feature allows individuals both outside and inside your company to review documents and “sign off” on them without incurring the cost of e-signature or actually signing and validating the document. Both you and the sender can also upload relevant attachments when sending documents, thus streamlining the process. 

This is essentially the equivalent of a clickwrap electronic signature. You’re likely familiar with these from any time you’ve downloaded a new app and checked a box to accept the terms and conditions, or when you open a new webpage and they ask you to accept the use of cookies. There’s precedence for this kind of signature being legally binding, so bear that in mind the next time you agree! 

Both automated internal approvals and manual acceptance sign-offs create logs so that the owner of the document is always aware of:

  • Who has opened the document?
  • Who has viewed the document?
  • Who is making changes?
  • Who has approved or accepted the document?

This makes it much easier, faster, and efficient to conduct business digitally, both in-house and with your clients. 

If accessibility is a concern, you should know that Revv makes it easy for you and your clients to access your documents anywhere at any time. Revv’s software makes one in-house workspace that can be accessed fluidly by your team no matter where they are and no matter what time zone. 

Revv also uses eSign technology for documents that need electronic signatures. When a document is sent to an outside client, it is sent via a secure link that can only be accessed by the recipient to which you assign the link. Revv complies with the latest and most up to date industry standards for electronic signature safety, including SMS-OTP authentication of the recipient for additional protection, and provides heightened safety and security on all documents.  

The takeaway

Digital signatures are a form of electronic signature that use additional layers of security and computer-coded technology to ensure the safety and validity of the signatures added to electronic documents. While digital signatures are secure, they are not as user friendly as standard electronic signatures and feature a level of security that is rarely used outside of governmental authorities and some banking institutions. 

A better option for obtaining necessary signatures on electronic documents is Revv’s all-in-one drag and drop editor, which allows you to create simple, easy to use electronic signature blocks without requiring extra legwork on your part or your client’s. 

Revv can help you get the approvals and signatures you need on your documents in a fully electronic and streamlined manner that will save you time and money and help you run your business in a paperless fashion. 

You can operate electronically with the assistance of Revv, your intelligent business partner. 

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Aditi

Aditi

Aditi is a Product Consultant at Revv, a leading document management software company that provides document templates that help run your business. All about chasing sunsets, her thoughts collide with everything SaaS and oscillates between the midnight musings of a poet and her fav authors. Can be mostly found near dogs or in a cafe with a book

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