A digital signature is a mathematically generated code that validates the authenticity of a software, message, or digital file. It uses encryption techniques that are secure enough to be considered legal and binding in some countries. It guarantees that the file has not been altered during transmission, providing a layer of security against cyber threats and attacks.

When a person creates a digital signature, two additional encrypted files are created. These are the “private key” which stays with the signature owner, and the “public key” which is sent along with the signed document to let the recipient open it.

A digital signature is like a person’s thumbprint. It is undeniable proof of that person’s identity.

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What are the Different Digital Signature Classes?

Digital signatures are of three classes, and these are:

  • Class 1: These digital signatures are “basic,” and so are only acceptable in instances with low levels of risk for data compromise. They are not acceptable when signing legal documents since their validation only requires a check for an email address and a username.
  • Class 2: These digital signatures apply to instances where there is a moderate risk for data compromise. Some of their applications include electronic filing of income tax returns, company registrations, and goods and services tax (GST) documents.
  • Class 3: These digital signatures are of the highest level. They require the user, whether an individual or a company, to prove their identity before a certifying authority before they can use them for signing. These can help when downloading contracts, participating in electronic auctions, electronic tendering, submitting bidding documents, or any circumstance where there is a high risk for data compromise.

Who Uses Digital Signatures?

Many organizations across industries use digital signatures to streamline their operations. Some of them include:

1. Government Institutions

Different government institutions use digital signatures to process tax returns, verify transactions, ratify laws, and manage contracts. For example, both local and federal establishments can use digital signatures to authorize the paperwork required to carry out tenders and procurement orders. They can also be used to approve the implementation of a project, purchase and expense requests, and various licensing forms.

2. Financial Service Providers

Another industry that highly benefits from using digital signatures is the financial services sector. Digital signatures allow them to increase the security of transactions, enable faster turnaround times for loan processing, automate processes to eliminate paperwork and reduce risks of fraud. Some of the activities that digital signature usage can automate include bank account opening, loan approval, and investment.

3. Healthcare Providers

The use of digital signatures in healthcare helped the industry to streamline not only administrative processes but also diagnostic efficiency. However, the use of digital signatures in healthcare must still comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).