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WHAT IS DIGITAL SIGNATURE?

A digital signature is a mathematical technique used to validate the authenticity and integrity of a message, software or digital document. It's the digital equivalent of a handwritten signature or stamped seal, but it offers far more inherent security. A digital signature is intended to solve the problem of tampering and impersonation in digital communications. Digital signatures can provide evidence of origin, identity and status of electronic documents, transactions or digital messages. Signers can also use them to acknowledge informed consent.

What are the benefits of digital signatures?

Security is the main benefit of digital signatures. Security capabilities embedded in digital signatures ensure a document is not altered and signatures are legitimate. Security features and methods used in digital signatures include the following: Personal identification numbers (PINs), passwords and codes. Used to authenticate and verify a signer's identity and approve their signature. Email, username and password are the most common methods used.

Asymmetric cryptography

Employs a public key algorithm that includes private and public key encryption and authentication.

Checksum

A long string of letters and numbers that represents the sum of the correct digits in a piece of digital data, against which comparisons can be made to detect errors or changes. A checksum acts as a data fingerprint.

Cyclic redundancy check (CRC).

An error-detecting code and verification feature used in digital networks and storage devices to detect changes to raw data.

Certificate authority (CA) validation

. Cas issue digital signatures and act as trusted third parties by accepting, authenticating, issuing and maintaining digital certificates. The use of CAs helps avoid the creation of fake digital certificates.

Trust service provider (TSP) validation

. A TSP is a person or legal entity that performs validation of a digital signature on a company's behalf and offers signature validation reports.

Other benefits to using digital signatures include the following:

Timestamping. By providing the data and time of a digital signature, timestamping is useful when timing is critical, such as for stock trades, lottery ticket issuance and legal proceedings.

Globally accepted and legally compliant. The public key infrastructure (PKI) standard ensures vendor-generated keys are made and stored securely. Because of the international standard, a growing number of countries are accepting digital signatures as legally binding.

Time savings. Digital signatures simplify the time-consuming processes of physical document signing, storage and exchange, enabling businesses to quickly access and sign documents.

Cost savings. Organizations can go paperless and save money previously spent on the physical resources and on the time, personnel and office space used to manage and transport them.

Positive environmental impact. Reducing paper use also cuts down on the physical waste generated by paper and the negative environmental impact of transporting paper documents.

Traceability. Digital signatures create an audit trail that makes internal record-keeping easier for business. With everything recorded and stored digitally, there are fewer opportunities for a manual signee or record-keeper to make a mistake or misplace something.

Classes and types of digital signatures

There are three different classes of digital signature certificates (DSCs):

Class 1. Cannot be used for legal business documents as they are validated based only on an email ID and username. Class 1 signatures provide a basic level of security and are used in environments with a low risk of data compromise.

Class 2. Often used for electronic filing (e-filing) of tax documents, including income tax returns and goods and services tax (GST) returns. Class 2 digital signatures authenticate a signer's identity against a pre-verified database. Class 2 digital signatures are used in environments where the risks and consequences of data compromise are moderate.

Class 3. The highest level of digital signatures, Class 3 signatures require a person or organization to present in front of a certifying authority to prove their identity before signing. Class 3 digital signatures are used for e-auctions, e-tendering, e-ticketing, court filings and in other environments where threats to data or the consequences of a security failure are high.

Uses for digital signatures

Industries use digital signature technology to streamline processes and improve document integrity. Industries that use digital signatures include the following:

Government. The U.S. Government Publishing Office (GPO) publishes electronic versions of budgets, public and private laws, and congressional bills with digital signatures. Digital signatures are used by governments worldwide for a variety of reasons, including processing tax returns, verifying business-to-government (B2G) transactions, ratifying laws and managing contracts. Most government entities must adhere to strict laws, regulations and standards when using digital signatures. Many governments and corporations also use smart cards to ID their citizens and employees. These are physical cards endowed with a digital signature that can be used to give the cardholder access to an institution's systems or physical buildings.

Healthcare. Digital signatures are used in the healthcare industry to improve the efficiency of treatment and administrative processes, to strengthen data security, for e-prescribing and hospital admissions. The use of digital signatures in healthcare must comply with the Health Insurance Portability and Accountability Act (HIPAA) of 1996.

Manufacturing. Manufacturing companies use digital signatures to speed up processes, including product design, quality assurance (QA), manufacturing enhancements, marketing and sales. The use of digital signatures in manufacturing is governed by the International Organization for Standardization (ISO) and the National Institute of Standards and Technology (NIST) Digital Manufacturing Certificate (DMC).

Financial services. The U.S. financial sector uses digital signatures for contracts, paperless banking, loan processing, insurance documentation, mortgages and more. This heavily regulated sector uses digital signatures with careful attention to the regulations and guidance put forth by the Electronic Signatures in Global and National Commerce Act (E-Sign Act), state Uniform Electronic Transactions Act (UETA) regulations, the Consumer Financial Protection Bureau (CFPB) and the Federal Financial Institutions Examination Council (FFIEC).

Cryptocurrencies. Digital signatures are also used in bitcoin and other cryptocurrencies to authenticate the blockchain. They are also used to manage transaction data associated with cryptocurrency and as a way for users to show ownership of currency or their participation in a transaction.