Digital Signatures vs. Electronic Signatures: 5 Key Differences

From user agreements to subscription sign-ups and home buying, electronic and digital signatures have revolutionized how we sign and authenticate documents. It has become a faster, more efficient, and eco-friendly process than handwritten signatures. However, the distinction between “electronic signature” and “digital signature” often creates confusion, leading to misunderstandings about their security, legal validity, and other appropriate use cases. 

Understanding the key differences between these two signature types can help you choose the right solution for your specific business requirements.

What is an Electronic Signature?

An electronic signature, or e-signature, is a broad term encompassing any electronic means of indicating agreement or approval on a document. It can be as simple as typing your name at the end of an email or clicking an “I agree” checkbox. Users may also draw their signatures on a touchscreen device. 

Common uses for this type of electronic signature include:

• Signing contracts and agreements online (employment contracts, NDAs, and sales agreements)
• Accepting terms and conditions during software installs or account sign-ups
• Submitting government forms or tax documents electronically
• Authorizing financial transactions, loans, and insurance paperwork
• Approving internal company documents such as purchase orders or HR forms
• Finalizing real-estate deals through digital platforms

What is a Digital Signature?

A digital signature, also referred to as a cryptographic signature, is a specific electronic signature that uses cryptographic techniques to enhance security and verify the authenticity of the user’s identity. 

Digital signatures rely on a mathematical algorithm to generate a unique digital fingerprint, called a hash, for each document. This hash is then encrypted using the signer’s private key, creating the digital signature. Finally, the signature is added to the document. The recipient can verify its authenticity with the signer’s public key.

Typical business applications for digital signatures include:

• Secure financial transactions
• Legal contracts and agreements
• Sensitive government documents
• Medical prescriptions and records

Digital signatures offer several key security features:

• Integrity: Any changes made to the document after signing invalidate the signature, ensuring the document’s integrity.
• Authentication: The signer’s identity is verified using their embedded signature through the digital certificate and the application of the private key, preventing impersonation.
• Non-repudiation: The signer cannot deny signing the document since their private key is required to create the signature.

Five (5) Key Differences between Electronic and Digital Signatures

Aside from their respective varied applications, digital and electronic signatures also differ in the following ways:

1. Security levels: Digital signatures offer more substantial security measures than basic electronic signatures. They use encryption and digital certificates to ensure the integrity and authenticity of the signed document. This makes the documents more difficult to forge or tamper with.
   
   
2. Authentication methods: Electronic signatures rely on various authentication methods, such as email verification, IP address tracking, or two-factor authentication. In contrast, digital signatures use digital certificates issued by trusted third-party Certificate Authorities (CAs) such as SSL.com to verify the signer’s identity.
   
   
3. Integrity verification: Digital signatures incorporate a unique hash of the document, which allows recipients to detect any changes made after the document has been signed. However, basic electronic signatures do not have built-in mechanisms to verify document integrity.
   
   
4. Non-repudiation: Digital signatures provide non-repudiation, meaning the signer cannot deny signing the document, as their private key is required to create the signature. Electronic signatures may not always offer this level of non-repudiation, depending on the authentication methods used.
   
   
5. Use cases and suitability: Electronic signatures are suitable for a wide range of everyday business transactions and agreements where a basic level of authentication is sufficient. Digital signatures are preferred for high-value, sensitive, or legally critical documents requiring the highest security and non-repudiation levels.

Legal and Regulatory Considerations

The lawful validity of electronic and digital signatures, especially for legal documents, varies across jurisdictions and industries. Many countries have enacted laws and regulations, such as the ESIGN Act and the Uniform Law Commission‘s Uniform Electronic Transactions Act (UETA) in the United States and eIDAS in the European Union, which grant legal recognition to electronic signatures, provided they meet specific requirements.

However, some industries, such as healthcare and government, may have specific compliance requirements that mandate digital signatures or other advanced authentication methods. Understanding the legal and regulatory landscape in your jurisdiction and industry is essential to help ensure compliance when using electronic or digital signatures.

How to Choose the Right Signature Solution

When selecting between an electronic or digital signature solution, consider the following factors:

• Security requirements: Assess the sensitivity and criticality of the documents you need to sign and choose a solution that offers the appropriate level of security.
• Ease of use: Look for a user-friendly platform that seamlessly integrates with your existing workflows and systems, making it easy for signers to adopt and use.
• Cost: Evaluate the pricing models of different solutions, considering factors such as the number of users, document volume, and additional features offered.
• Tailored to your business: Popular electronic and digital signature platforms like eSigner.com offer a range of features, integrations, and compliance certifications to suit various business needs.

As an industry-leading provider of digital certificates and public key infrastructure (PKI) solutions, SSL.com understands the importance of secure and reliable digital signatures.