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What is a Digital Signature? How Does it Work?

What is a Digital Signature? How Does it Work?

As more and more businesses adopt paperless processes, the adoption of e-signatures has taken off. But there is some confusion between the different technologies that are involved. A lot of people ask me about the differences between electronic signatures and digital signatures.

To fully understand the topic, it’s important to understand what a digital signature is and how it works. Today I’ll give you a bird’s eye view of this complex technology. If you’d like to learn more about the nuts and bolts, feel free to contact us to find a time to talk about it with John Harris, our director of product management and in-house digital signature expert.

What is a Digital Signature?

A digital signature is a way to sign documents, but it’s more than that. You’re probably already using digital signatures today. Ever see a lock icon or a green background in your browser’s address bar when you’re shopping online? That’s a digital signature too. That type of digital signature verifies a server or the content of a webpage.

digital signatureWhen you sign a document online with digital signatures, the digital signature is used to verify that a signed document is authentic. Digital signatures can prove the identity of the person signing the document and can show whether the document has been tampered with since it was signed.

Digital signature technology has been used for decades, which means it’s highly standardized and accepted. This is important because your documents need to be legally valid not just today but years down the road. Digital signature technology isn’t some trend that will come and go, leaving your business wondering what to do next. Digital signatures are here to stay.

Because digital signatures are embedded into the documents and are based on industry and international standards, they can be verified independently. Digital signatures are also more widely accepted internationally than more simplistic types of electronic signatures.

How Do Digital Signatures Work?

To create a digital signature, the content of the document being signed is used to create a very long unique number called a hash. The hash code is unique to the document, and it records what the document looked like at the time of signing. Think of it like a fingerprint for the document.

The hash code is then encrypted using the signer’s private key (a code that only the signer can access), and the encrypted hash becomes the digital signature. The identity of the signer, the nature of the document when it was signed and the digital signature itself are permanently embedded into the document.

The signer’s digital certificate works alongside the digital signatures. The digital certificate is a public version of the signer’s private key, and third parties can use it to verify the signatures and the identity of the signer. This provides evidence in case a signer tries to argue, “Those terms weren’t in the document when I signed it.”

Easy Digital Signatures with SIGNiX

With SIGNiX, you can be sure of the identity of each person signing a document. When a signer comes into our system, we use a patented process to confirm their identity and authorize them to sign documents with a digital signature, giving you the assurance you need to close business online.

If this technology sounds complex, don’t worry. We make it easy to take advantage of this advanced technology without any IT experience. At SIGNiX, we manage the world of certificates and private keys so that you and your customers don’t have to.

Creating a document to be sent out for signature is simple and can take less than a minute (check out this video to see for yourself), and training your staff to use digital signatures couldn’t be easier. We offer training sessions for your staff, and many customers are getting documents signed within a day of signing up for the service.

Looking for more information on contract management software? Check out our side-by-side comparison of leading platforms in the Top 10 Contract Management Software report. You can also browse exclusive resources on CLM and e-signature solutions on our contract mangaement research page.

[This post originally appeared on the SIGNiX blog and is republished with permission.]

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Emily Maxie

Marketing Director, SIGNiX
Marketing Director & Technology Blogger
Emily is a marketing professional with experience creating innovative marketing campaigns in various industries, including financial services, technology and health care.