A digital signature is the electronic equivalent of a handwritten signature and has the same legal value. It is used to sign documents digitally and provides assurance that the document has not been altered and that the signatory is authentic. Digital signatures are based on encryption technology and act as a unique seal for electronic documents.
Think of a digital signature as a digital wax seal, but much more secure. When you apply it to a document, it guarantees that:
- Sender Authenticity: confirms the identity of the person or entity that signed the document. You know with certainty who sent the message.
- Data Integrity: Ensures that the document has not been modified or altered after it has been signed. Any small change would render the signature invalid.
- Non-repudiation: the signer cannot later deny that they signed the document, because the signature is cryptographically linked to their identity.
How does a digital signature work?
The process is based on public-key cryptography:
- Private (secret) key: The private key is a unique key that only the signer holds and controls. It is used to “sign” the document.
- Public key: The public key is a key derived from the private key, but which can be publicly distributed. It is used by anyone who wants to verify the signature.
The general steps are as follows:
- Signature creation:
- The original document is processed through a hashing algorithm to create a unique “digest” of the data, called a hash (or “fingerprint” of the document).
- This hash is then encrypted using the signer’s private key. The result is the digital signature.
- Signature verification:
- The receiver receives the digitally signed document and the attached signature.
- The receiver generates a new hash of the received document using the same hashing algorithm.
- The received digital signature is decrypted using the signer’s public key.
- If the decrypted hash corresponds exactly to the new hash generated by the receiver, then the signature is considered valid. This confirms that the signer is authentic and that the document has not been altered.
Applications and importance
Digital signatures are essential in many digital domains:
- Online transaction security: Ensures the validity of bank transfers, card payments and other financial transactions.
- Electronic contracts and agreements: Gives legal validity to digitally signed documents.
- Secure communication: Verifies the authenticity of emails or messages, preventing phishing.
- Blockchain and cryptocurrency: Every cryptocurrency transaction is digitally signed with the sender’s private key, ensuring that only the owner of the funds can spend them and that the transaction cannot be altered.
- Software security: Confirm that the downloaded software comes from a trusted publisher and has not been modified.
Examples of digital signature usage
For freelancers and entrepreneurs:
- Signing contracts with clients
- Electronic invoices issued quickly and efficiently
For small and medium businesses:
- Quick approval of internal documents (e.g. policies or procedures)
- Signing partnership agreements
For corporates:
- Signing board decisions
- Automate multiple approvals globally
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