What Is a Digital Signature and How Does It Work?

UTC by John Caroline · 7 min read
What Is a Digital Signature and How Does It Work?
Photo: Shutterstock

Being a crypto enthusiast comes with the need to get familiar with common terms in the industry. If you have ever heard of digital signature and are curious about what it means and how it works, then the guide below will provide a clear understanding of it.

A digital signature could best be understood as a modern alternative to the traditional handwritten signature applied on documents with paper and pen for the purpose of authenticity, reference to the originator, and proof of the integrity of the content of the document. A digital signature, however, provides a much better inherent security for documents in transit.

In terms of terminology, a digital signature is an algorithm-generated mathematical technique that is often used to validate or check the integrity and authenticity of a message transmitted or processed in the digital space such as an email, a digital document, or a credit card transaction. Digital signatures are a type of electronic signature that creates a virtual or digital fingerprint specific to an individual or entity and which are used for identifying users, as well as protecting information or contents of digital documents or messages. Compared with other forms of electronic signatures, digital signatures have a more significant level of security.

A digital signature ensures that the contents of a document or message in transit are not altered or tampered with. Thus, helping to overcome impersonation problems and alterations in digital communications.

Additionally, digital signatures provide information such as the initial source of the transmitted message, the status, and also the signer’s consent.

Digital Signature and Its Role

As with its traditional equivalent (handwritten document signatures), digital signatures are considered to have legal binding in many regions or countries of the world.

Added to the function of signing digital documents, digital signatures are used also for the validation of financial transactions, software distribution, email service providers, etc.

The integrity and authenticity of data with a digital signature are guaranteed by public key infrastructure – an industry-standard technology.

How Do Digital Signatures Work?

Providers of digital signing solutions like Zoho use a mathematical algorithm to generate a public key and a private key. A cryptographic hash is then generated for the digital document when signed digitally by a singer.

The generated hash is further encrypted with the private key of the sender and appended to the document. Then the document is sent to the receiver with the public key of the sender.

The encrypted hash can be decrypted by the recipient using the public key certificate of the sender, and a cryptographic hash becomes generated at the end of the receiver.

A comparison is made on the cryptographic hashes from both ends of the sender and receiver to confirm its authenticity. If both hashes match, it implies that the document has not been altered and is therefore validated and fit for acceptance and use by the receiver.

Benefits of Digital Signatures

Digital signatures for the solutions they provide have caught the interest of many individuals and corporate persons. It is an electronic signature that allows the sender of a message to electronically sign a document and thus become validated as the originator, and as having sent a trusted and secure message. It ensures that messages remain untampered in transit until they get to the recipient.

Digital signatures provide ease and efficiency of paperwork in offices. Hence, the benefits they provide have more offices rooting for the adoption of e-signatures to digitally provide a much better workplace. In clear terms, some of the benefits of digital signatures are outlined as follows:

  • Efficiency. With the use of digital signatures, urgent documents no longer have to be put on hold for an important signatory to be physically present to sign on them before the documents are acted upon. This helps to save time spent on executing important tasks which require authorization from duly signed documents. This is especially useful when the person in a position to sign the document is located in a different place geographically and cannot be readily available physically where the document originated.
  • Cost savings. The use of digital signatures helps companies and individuals who transmit digital documents to save the cost of paper, ink, printing, scanning, and delivery which are the common features of traditional handwritten document signatures.
  • Workflow efficiency. Digital signatures make for a better flow of work by reducing or eliminating complete delays caused by handwritten document signatures. It also aids less time and effort to manage and track documents. Thus, speeding up the process or flow of work.
  • Improved user experience. Customers are provided the convenience of signing vital documents without necessarily being present physically. At any location they are, they can conveniently sign documents that require their signatures to complete a trade de or rectify a query. This saves the customer the cost and time of transportation as well as reduces the human traffic for the vendor. This provides personalized and improved services which are ideal, particularly in remote areas or small townships. The customer has the liberty of engaging the company anywhere – making for ease, speed, and a user-friendly experience.
  • Security. Authenticity and security of data are very vital to the topic of signatures. Risks of duplication or alteration to the document are reduced with the use of digital signatures as they ensure that signatures are authentic, legit, and verified. People who sign on digital documents are provided with passwords, PINs, and codes that can authenticate their identity and create approval for their signatures. The date and time of the signature are made known and available with time stamping which makes it possible to track the document and reduce the risk of alterations to the document. The security features of digital signatures help to prevent alterations to documents without authorization.
  • Legal support. Digital signatures can be used to provide evidence of transactions in a court of law as they provide authenticity and verification of signatures which can serve the same function as traditional handwritten signature documents. Tracking and storing of documents are also made easy with time stamping, which enhances and makes audit and compliance simplified.

Digital Signature vs Electronic Signature

There’s a common misconception that digital signature and electronic signature are one and the same thing, and can be used interchangeably. This is, however, not the case. Whereas digital signatures are a form of electronic signatures, all electronic signatures are not actually digital signatures. Electronic signatures are any symbol, sound, or process that shows the intention of signing something. It could be in the form of scanning a handwritten signature, or stamp. It could even be a typed name on the signature line of a document.

Creating a Digital Signature

A digital signature provides ease and security to the process of signing documents digitally. They provide avenues for transmitting and signing documents digitally, as well as work with the relevant authorities of Certificates to provide legitimate digital certificates. The information required depends upon the Certificate Authority that is used. Also, there could be some established rules and regulations as regards the person to whom documents are sent digitally for signing and the manner in which they are signed. When documents are received for signing via email, authentication must be made in respect of the requirements of the Certificate Authority before proceeding to sign the document by filling out a form online.

Bottom Line

To sum up, digital signatures are a much better alternative to traditional handwritten document signatures due to the ease, simplicity, and security that they provide.

There are skeptics about how secure digital signatures are. However reasonable these fears may be, they need not be welcomed because digital signatures make use of public key infrastructure which provides a rather high-security level that makes duplication difficult.



What is a digital signature?

A digital signature is a mathematical algorithm that validates the authenticity and integrity of a message transmitted digitally, a digital document, or software.

How does a digital signature work?

Digital signatures work with public key cryptography’s two mutually authenticating cryptographic keys. The person who creates the digital signature uses a private key to encrypt data that are signature-related, and the only means of decrypting the data is with the signer’s public key which the receipt has to possess. If the recipient is unable to open the document with the signer’s public key, it indicates there’s a problem with either the document or the signature. This is how digital signatures are authenticated. 

Why are digital signatures secure?

One of the features which make digital signatures secure is a time tracking which makes it possible to manage and track the time and dates of signatures.

What’s the difference between a digital signature and an electronic signature?

Digital signatures are a form of electronic signatures, whereas not all electronic signatures are digital signatures. Electronic signatures are any symbol, sound, or process that shows the intention of signing something. It could be in the form of scanning a handwritten signature, or stamp. It could even be a typed name on the signature line of a document. 

What is public key infrastructure?

Public key infrastructure (PKI) is a set of software, hardware, and procedures that are required to manage digital signatures securely. Each digital signature transaction involves a pair of keys which are a public key and a private key.

What is a certificate authority?

Certificate authorities are organizations that are industry-trusted and generally recognized for ensuring the security of key and digital certificates.

How to create a digital signature?

In the platform of the document intended for transmission, the sender chooses the file to be digitally signed. The sender’s computer then calculates the file content’s unique hash value, and the digital signature is created by encrypting this hash value with the sender’s private key.

How to Invest in Commodities? September 25th, 2023

In this guide, we will delve into what commodities are, the reasons to invest in them, their risks and advantages, and the most po...