Electronic vs. Digital Signatures

The days of printing hard copy documents and authenticating them with a wet signature are on their way out. Like so many aspects of the business world, the process of certifying and authenticating documents has been digitized.

While electronic and digital signatures are now the norm, confusion remains on the difference between the two. Though the terms are often used interchangeably, both signatures function quite differently. The main difference? Security.

With growing concerns over the authentication, validation, and security of digital transactions, it's never been more critical for businesses to understand the difference between electronic and digital signatures.

What are the features of an electronic signature?

An electronic signature is the digital form of a legally binding, wet ink signature. However, an electronic signature doesn't have to be an actual, digitized signature. It can be an electronic symbol, sound, or image attached to a contract or record where there is an intention to sign documents by the party involved.

Electronic signatures are often used because they're straightforward to execute. It can be a simple mouse-click in a box, a verbal signature, or any electronic authorization. Most often used in agreements or contracts entered into by two parties, electronic signatures are legally binding, though they do not integrate any coding or digital certificates. Instead, electronic signatures are used mainly to verify the document.

As with physical signatures, there is potential for forgery. Additional security is often required. Digitization has given rise to new security, encryption, and verification forms for documents with new cryptographic algorithms.

What are the features of a digital signature?

A digital signature is a unique element that acts as a singular, digital fingerprint embedded into the document being executed. It acts as a digital certificate that links the signers to the document and cannot be imitated. Digital signatures utilize encryption standards and Public Key Infrastructure (PKI) technology so that certificate authorities can certify the document's authenticity and prevent tampering. A digital signature is the way to go when a document needs to be secured.

Digital signatures use private and public key infrastructures to validate the authenticity of electronic signatures. These keys are long sets of numbers encrypted into the document, which acts as a secure digital signature. The digital signature is considered invalid if the document is tampered with or changed after execution, providing non-repudiation — meaning the signer cannot deny having signed the document.

In the same way a passport validates and identifies a citizen's nationality, so does a digital signature authenticate the identity of the participants and signers of an online transaction.

What are the differences between a digital signature and electronic signature?

Below are the key differences between digital signatures and electronic signatures:

• ​Security: Digital signatures use cryptographic technology (PKI) to ensure authenticity and integrity, while electronic signatures may not have such protections.
• ​Verification: Digital signatures provide a way to verify the identity of the signer and detect any tampering with the document. Electronic signatures are easier to implement but offer less robust verification.
• ​Legal Defensibility: Digital signatures offer stronger legal defensibility due to cryptographic proof and tamper detection.
• ​Use Cases: Electronic signatures are generally sufficient for low-risk agreements, while digital signatures are often required for regulated industries where document integrity must be provable in court.
• ​Non-repudiation: Digital signatures provide non-repudiation, meaning the signer cannot credibly deny having signed the document.

Legal Recognition and Compliance

Both electronic and digital signatures are legally recognized under frameworks like the U.S. ESIGN Act and EU eIDAS regulation. However, digital signatures provide stronger legal defensibility due to their cryptographic proof of authenticity and tamper detection.

Electronic signatures are generally sufficient for low-risk agreements where trust is established, but digital signatures are often required for regulated industries like healthcare, finance, and government contracts where document integrity must be provable in court.

The key legal advantage of digital signatures lies in their ability to provide non-repudiation — the signer cannot credibly deny having signed the document due to the cryptographic binding between their identity and the document content.

How do businesses benefit from digital signatures?

Upgrading your agreement process to secure, verifiable, digital signatures doesn't have to be a headache. Businesses trust the digital signature process because it ensures validation of every document's authenticity and prevents tampering. Documents can be sent, signed, and secured from the comfort of one's home or office.

Businesses rely on tools like digital signature platforms to execute digital signatures verified by a notary. These platforms also provide a complete audit trail of transactions and a centralized repository for executed documents. Trusted by banks, credit unions, law firms, and insurers alike, such platforms simplify the notarization process while keeping documents safe and secure.

Frequently Asked Questions

Are digital signatures more secure than electronic signatures?

Yes. Digital signatures use PKI encryption and certificate-based verification to authenticate signers and detect tampering, making them significantly more secure than basic electronic signatures.

When should I use a digital signature instead of an electronic signature?

Use digital signatures for high-value transactions, regulated documents (financial, healthcare, legal), or any situation where document authenticity might be challenged in court.

Are both types legally binding?

Both can be legally binding under laws like ESIGN and eIDAS, but digital signatures offer stronger evidence of authenticity and intent due to their cryptographic verification.

Can electronic signatures be forged?

Basic electronic signatures (like typed names) can be relatively easy to forge, while digital signatures with proper PKI implementation are extremely difficult to forge due to their cryptographic protections.