Difference between Electronic Signature and Digital Signature

difference between Electronic and Digital Signature

Traditional business practices have become more automated as society becomes more and more dependent on digital processes, and many industry sectors are eager to capitalize on an ever-growing consumer base that is tech-savvy. While many electronic communication devices have entered the market over the past ten years, there has also been a clear need for businesses to replace paper-based processes with more effective ones. E-signatures built on digital signature technology are leading the way in this direction.

There are still misunderstandings about how digital signature technology fits into the picture, even though e-signature has become a standard in digital processes. Federal law has recognised electronic signatures as a legal concept since 2000, but to the average person, a digital signature is the same thing. However, the fundamental differences between electronic and digital signatures are obvious. Firstly Let’s see about Electronic and Digital Signature.

Electronic Signature

An electronic signature is a legal concept, just like its paper counterpart. An e-signature is defined as a “electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a person with the intent to sign a record” by the U.S. Electronic Signatures in Global and National Commerce Act.

  • Can be a signature image, fingerprint, click, process, symbol or process
  • Main goal of an eSignature is to verify a document
  • Does not include digital certificate 
  • Legally binding if all parties consent to signing electronically
  • Document not necessarily secure
  • Not all electronic signatures are digitally signed

Digital Signature

On the other hand, a digital signature makes reference to the encryption and decryption technology that forms the foundation of an electronic signature system. An electronic signature is not defined by a digital signature alone. Instead, digital signature encryption protects the information linked to a signed record and aids in confirming its authenticity. When used alone, it is unable to reveal a person’s desire to formally sign a document or accept a legal obligation. 

An e-signature solution that does nothing more complicated than sign documents digitally frequently lacks feature sets found in best-in-class e-signature solutions, such as an out-of-the-box user interface (UI), transaction management, and advanced workflow customization capabilities used in more complicated customer-facing transactions.

  • Signature is essentially an electronic fingerprint backed by digital certification for encryption
  • Main goal of a digital signature is to verify a signer’s identity. 
  • Digital signature authenticates the document 
  • Legally binding 

What is the Difference between Electronic Signature and Digital Signature?

The primary distinction between a digital signature and an electronic signature is that a document is sealed and identified with a digital signature to prevent forgery. The use of electronic signatures, in contrast, ensures that a document’s terms are treated as legally binding as long as the document bears an eSignature. 

Despite the fact that electronic and digital signatures are frequently used in tandem when signing contracts, there are a few notable distinctions between the two types of signatures. These variations include:

The Purpose of Electronic Signature and Digital Signature

The fact that digital signatures and electronic signatures are used to accomplish various goals is one of their biggest distinctions. 

For instance, a digital signature’s primary function is to secure the document and ensure that it hasn’t been forged, altered, or tampered with. An electronic signature, on the other hand, is frequently used to show that a signer is consciously and proactively entering into a binding agreement or contract. 

This means that while electronic signatures are used to prove a document’s authenticity, digital signatures are used to demonstrate a specific agreement to the terms of a document. 

The two types of signature typically function together to make sure that contracts and other agreements are valid and legally binding.

Common Uses of Electronic and Digital Signature

Electronic signatures and digital signatures serve different purposes, so they are frequently used in various contexts. 

Business contracts frequently include electronic signatures to demonstrate that a signatory agrees to the conditions stipulated by the other party. A signatory will demonstrate its intention to establish a legally binding relationship and fulfill the requirements laid out for both businesses by creating an electronic signature. 

On the other hand, rather than business teams looking to close a deal, certification authorities or trust service providers frequently use digital signatures. These organizations will check the digital document and validate the digital signatures.

How are they Created?

Although contract parties may create electronic signatures in Word or PDF or even by using taxinn’s native eSignature feature, digital signatures are not made by individuals. 

Individuals and teams signing or otherwise marking contracts create and add electronic signatures to them. 

In contrast, software and algorithms are used to generate digital signatures. This relies on a cutting-edge technique known as Public Key Infrastructure (PKI), which consists of a collection of procedures, hardware, and software that work together to ensure that data is transferred securely by creating two keys: a public and a private key.

Degree of Security 

The idea behind digital signatures is that because they cannot be altered or tampered with, they are more secure. Similar to Taxxinn, digital signatures frequently offer a thorough audit trail that enables parties to determine whether and when specific changes to a document have been made, as well as when and by whom they were signed. 

Electronic signatures don’t always have to adhere to the same strict standards as digital signatures, which encrypt data using cryptographic techniques. Because of this, some electronic signatures are less secure.

Which one is Best?

There is no clear winner among electronic signatures and digital signatures because they serve different purposes. When businesses agree to contracts online, they should think about the level of security and integrity they want to achieve. 

Any electronic signature software should be adequate if you’re looking for a quick and easy way to add a signature to a contract electronically and show that you agree to certain contract terms. 

But you’ll probably want to strengthen your electronic signature functionality by including a digital signature as well if you want to increase the security of your contracts and lower the risk of forgery and tampering.

You can manage and sign contracts securely on one platform thanks to Taxxinn, all-in-one contract automation software, which combines the simplicity of e-Signature with the security of a digital signature.