The terms digital signature and electronic signature are often used interchangeably by businesses when it comes to agreeing contracts online. However, contrary to what most people assume, digital signatures and electronic signatures are not the same thing.
This misunderstanding means that legal and business teams are often using the wrong tools to sign contracts, or worse, using tools that lack security and integrity.
But fear not. This Juro deep-dive will explain exactly what digital signatures and electronic signatures are, when they should be used and how they differ.
If you're looking for a way to sign contracts securely online, hit the button below. To discover the more nuanced differences between eSignatures and digital signatures, keep reading.
As described in more detail in one of our earlier posts about electronic signatures, an eSignature is an alternative way for businesses to sign contracts without using wet ink.
Rather than having to physically add an impression, mark or name to a paper contract using a pen, electronic signatures enable legal and business teams to create these signatures online instead. These electronic signatures demonstrate a party’s willingness to agree to certain contract terms, and so are legally binding as a result.
Electronic signatures can be created in lots of ways. However, the most common way to add a legally binding eSignature to a contract is by adding them manually to PDFs, Word documents and spreadsheets. Or even better, by using a contract platform like Juro.
What is a digital signature?
A digital signature, also known as ‘sealing a document’, is a way of providing evidence of a document’s integrity and authenticity. It isn’t a signature in the legal sense, but rather a safeguard against tampering and forgery when managing different documents.
Distinct from electronic signatures which use more basic authentication methods to verify signer identities, like phone PINs and email addresses, digital signatures rely on more advanced authentication processes, like certificate-based IDs.
Digital signatures create a way of identifying the document, and all digital signatures are unique, meaning that they can’t be altered or replicated in any way. This helps to ensure that the person signing a contract is who they claim to be and that the signature hasn’t been forged in any way. It also protects documents from tampering by creating a detailed audit trail that makes all interactions with a contract or legal document traceable.
Juro’s native eSignature functionality achieves this same level of security by using strict identity verification processes, like collecting IP addresses, creating timestamps and creating a detailed audit trail.
This means that Juro users benefit from the security of a digital signature and the legal validity of an electronic signature - all with one tool. But are digital signatures and electronic signatures the same thing? And if you’re not using a tool like Juro, which do you need?
Let’s find out.
Is a digital signature the same thing as an electronic signature?
No. Although some people use the terms digital signature and electronic signature interchangeably, they are fundamentally different things and they perform different functions.
Although both electronic signatures and digital signatures add authenticity and integrity to documents, they do so in different ways. Digital signatures make it possible to identify specific documents, whereas eSignatures demonstrate the intent of a signatory to be legally bound by the terms within a specific document.
For example, Juro’s advanced electronic signature functionality allows legal and business teams to sign contracts electronically using any device. But it’s Juro’s digital signature properties that ensure contracts are signed legitimately and remain tamper-proof.
This means that although they are not the same, digital signature technology can be used alongside electronic signatures to make them more secure.
What is the difference between a digital signature and an electronic signature?
The main difference between a digital signature and an electronic signature is that digital signatures are used to seal and identify a document to protect it from forgery. By comparison, electronic signatures are used to ensure that the terms within a document are treated as legally binding, so long as the document has been marked with an eSignature.
Although digital signatures and electronic signatures are often used together when agreeing contracts, there are a few, specific differences between the two types of signatures. These differences include:
💡 Their purpose
One of the biggest differences between digital signatures and electronic signatures is that they are used to achieve different purposes.
For instance, the main purpose of a digital signature is to secure the document and verify that it hasn’t been tampered with, altered or forged. By comparison, an electronic signature is commonly used to indicate that a signer is actively and knowingly entering into a binding agreement or contract.
This means that whilst digital signatures are used to prove the authenticity of a document, an electronic signature is evidence of an agreement to the terms of a document more specifically.
In most cases, the two types of signature work simultaneously to ensure that contracts and other agreements are legitimate and legally binding.
💼 Common use cases
Since the purpose of digital signatures and electronic signatures differ, they are often used in different ways and contexts too.
Electronic signatures are commonly added to business contracts to show that a signatory wishes to agree to the terms laid out by the other party. By creating an electronic signature, a signatory will demonstrate its intention to create a legally binding relationship and fulfill the obligations set out for both businesses.
On the other hand, digital signatures are often used by certification authorities or trust service providers, rather than commercial teams seeking to close a deal. These bodies will validate the digital signatures and verify the digital document.
🔏 How they’re created
Whilst electronic signatures can be created by contract parties in Word or PDF, or even using Juro’s native eSignature feature, digital signatures are not created by people.
Electronic signatures are created and added to contracts by individuals and teams signing or marking the document in some way.
Digital signatures, by contrast, are created by software and algorithms. This relies on an advanced method called Public Key Infrastructure (PKI), which is a set of processes, hardware, and software that combines to ensure data is transferred securely by generating two keys - a public and a private one.
⚡ Ease of creation
Since digital signatures rely on strict security mechanisms and processes, it is often more challenging to deliver a digital signature than it is an electronic signature.
This is because there’s often no validation process for standalone electronic signatures, whereas when a digital signature is added to a document, the user’s identity is verified and cryptography is used to bind the digital certificate.
Fortunately, legal and business teams can benefit from the security of digital signatures and the legal validity of electronic signatures with ease using Juro.
Juro’s native eSignature feature enables users to sign contracts quickly and easily, with the platform creating an immutable document record and an audit trail of key actions on their behalf. This makes getting contracts over the line seamless, without compromising on security.
🔑 Level of security
The idea behind digital signatures is that they are not susceptible to tampering or alterations, which makes them more secure as a result. Like Juro, digital signatures often provide a detailed audit trail that enables parties to identify if and when specific changes have been made to a document, as well as when it’s been signed and by who.
Unlike digital signatures which use cryptographic encryption methods, electronic signatures don’t necessarily need to meet the same stringent requirements as digital signatures. This means that certain electronic signatures are less secure as a result.
Digital signature vs electronic signature: which do you need?
Electronic signatures and digital signatures perform different functions, so it isn’t a case of deciding which one is best. Instead, businesses should consider what level of security and integrity they want to achieve when agreeing contracts online.
But if you want to enhance the security of your contracts and reduce the risk of forgery and tampering, you’ll likely want to strengthen your electronic signature functionality by adding a digital signature too.
Juro’s all-in-one contract automation software combines the ease of eSignature and the security of a digital signature, allowing you to manage and sign contracts securely in one platform.
Looking for a fast and secure way to sign your business contracts? Hit the big button below to find out more.
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