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A Quick Guide To Digital Signatures | How They Work and Their Benefits!

Traditional ‘wet’ signatures have been the common method of signing documents across industries for years. They come in numerous forms including signs, stamps, seals, and marks. However, as technology continues to advance, these traditional signatures are quickly becoming outdated. Today, there’s a new method of signing documents called digital signatures. 

This post takes a closer look at digital signatures, how they work, and their numerous benefits. Keep on reading to learn more. 

Electronic Signature Vs. Digital Signatures

Before anything else, it’s important to understand the difference between electronic signatures (e-signatures) and digital signatures. You’ll also want to learn how to create a digital signature and the legalities surrounding it.

While most people tend to use the two terms interchangeably, they’re actually different things. 

Electronic signatures are simpler. In general, it only involves an individual’s electronic agreement to the document. This can be presented by a cursive font, an attached image of a signature, or a mouse-drawn signature. 

Meanwhile, a digital signature is a type of electronic signature and is more complex. Digital signatures generate a virtual fingerprint that’s unique to the person signing. They’re used to identify users and protect the information in digital documents or messages. This makes digital signatures more secure than other forms of e-signatures. 

For personal uses, an e-signature should suffice. Yet for businesses or other entities, a digital signature can offer more validity and legality when it comes with sensitive documents.

How Do Digital Signatures Work

A cartooned hand coming from a laptop signing a document

Digital signatures follow a specific protocol known as Public Key Infrastructure (PKI). It uses a mathematical formula to generate two long numbers, called keys, to verify communication’s integrity and veracity. One key is private and the other is public. 

When you sign a document, the digital signature is created using your private key. The mathematical algorithm creates a hash or data that matches the signed document; then, the data ends up being encrypted. This encrypted data is your digital signature and also carries the document timestamp. 

Then, you send the signed documents to your recipient along with the public key to decrypt the signature. If the document is modified after signing, the generated hash is also modified and it no longer matches the public key. As a result, the digital signature becomes invalidated.

Why Use Digital Signatures

As the business world transitions to paperless and digital processing, digital signatures are quickly becoming a necessity. Here are some of the most important benefits of using digital signatures. 

  • They Provides Higher Security

As mentioned before, digital signatures are built on PKI technology, ensuring that the signature becomes part of the final document. This provides better security and prevents fraudulent actions such as modifying the document after signing or removing the signature. 

  • Using Digital Signatures Saves You On Costs 

Signing digitally provides significant savings in terms of document management. Using digital documents and signage means you eliminate the need for ink, printing, paper, delivery, travel, and more. In addition, it also helps reduce indirect expenses including archiving, filing, and tracking of documents. 

Cartooned document with a signature
  • Digital Signatures Improve Workflow

Digital signatures help save time and streamline the document signing process. It’s a lot simpler and takes less effort to manage and track papers if digital signatures are used. Businesses can easily sign papers and contracts with a single click with digital signature technologies. 

Also, it’s possible to sign documents and re-send signed documents virtually from anywhere, minimizing delays and improving overall organizational workflow.

Are Digital Signatures Legally Binding

Some people have reservations about digital signatures and often question if these signatures are actually valid and admissible in a court of law. The short answer is– yes, digital signages are legally recognized and binding. 

In the United States, a federal law known as the Electronic Signature in Global and National Commerce Act (ESIGN Act) was passed in 2000. This law grants legal recognition and acceptance of e-signatures and digital signatures to have the same legal weight as traditional ‘wet’ signatures. This ensures that digital signatures are legally binding and accepted in states where federal legislation applies. 

Plus, there’s another legislation known as the Uniform Electronic Transaction Act (UETA) which covers digital signatures. Developed by the Uniform Law Commission, UETA acts as a legal guide for the use of electronic documents and digital signatures to ensure that they’re just as legally enforceable as their paper counterparts. 

Furthermore, some states such as Illinois also have their own legislation and regulations to ensure that digital signatures have the same validity and legality as handwritten signatures. 

Essentially, regardless of where you conduct your business in America, digital signatures offer easy, efficient, and legally binding documents. 

Man and digital documents with signatures

But there’s a catch. In order for a digital signature to be valid, there are several elements required to ensure that transactions with digital signatures are accepted legally. These requirements include:

  • Intent

In traditional ink signatures, an individual should sign the document deliberately and purposely to be valid and legally binding. The same is true with digital signatures. You need to demonstrate that the signer had definite intent to sign. To do this, you can provide a clear option not to sign your documents.

  • Consent

In addition to making it clear that there’s an intent to sign, you also need to prove that the signer consented to conduct the transaction online or electronically. For instance, you can include a consent clause in your document and require signers to check or click the ‘I Accept’ button before signing when they’re viewing the document

Cartooned man writing his signature on a document

  • Association

You need to make a clear association or direct connection between the digital signature and the document being signed. 

  • Attribute

You need to have a clear attribute of the signature such as an internet protocol (IP) address, email trail, or a time stamp. Some digital signature tool providers may also have a two-step identification system for signers. This creates an extra security step for creating a higher standard of attribution. 

When you satisfy these requirements, your digitally signed documents can be as legally-binding as paper-based documents. 

How Do You Create Digital Signatures

To create digital signatures that hold legal validity, you need to use e-signature providers such as jSign. These providers offer reliable solutions based on digital signature technology, making it easy to create and sign documents online. 

The best e-signature providers can provide an interface for signing and sending documents online and work with the proper Certificate Authorities to offer trusted digital certificates. 


As a core component of technological transformation, digital signatures are quickly becoming a key element of most business transactions and documentation. Businesses of all shapes, sizes, and locations can benefit from digital signatures–streamlining processes, expanding their reach, and establishing stronger relationships with other organizations while ensuring that all digitally-signed documents are legally binding. 

About Dusan Stanar

I'm the founder of VSS Monitoring. I have been both writing and working in technology in a number of roles for dozens of years and wanted to bring my experience online to make it publicly available. Visit https://www.vssmonitoring.com/about-us/ to read more about myself and the rest of the team.

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