What Are Digital Signatures?
Digital signatures are a more secure type of electronic signatures that are directly cryptographically bound to the document, creating a unique digital “footprint” that verifies the signer’s identity and ensures the content remains unaltered. This is enabled by digital certificates, which are obtained from a trusted third-party and ensures that it is unaltered.
What Separates Digital Signatures from Wet Signatures and Other Electronic Signatures?
What separates a digital signature from other signing methods, such as wet signatures and other electronic signatures, is its underlying technology that ensures authenticity and integrity. Wet signatures can be easily forged and other electronic signatures (e.g., a scanned wet signature placed on a PDF document) lack security.
On the other hand, digital signatures have built-in technical components that create an immutable link between the signer and the document that other signing methods are incapable of. These technical components are: public key infrastructure (PKI) and digital certificates
Public Key Infrastructure
At its core, a digital signature derives its security from public key infrastructure or PKI, a system that manages encryption keys to provide secure communication and verification. It operates through a pair of linked keys:
- Private Key: Known only to the signer. This key encrypts the document’s hash (a condensed version of the document’s data — think of it like a unique “digital fingerprint”). This creates the digital signature, binding the signer’s identity to the document.
- Public Key: Shared with the recipients. This key is used to decrypt the signature and verifies that the document’s hash matches its original state.
This dual-key process ensures that the signer is authenticated and that any unauthorized changes to the document after it has been signed will invalidate the signature.
Digital Certificates
While a PKI provides the mechanism for signing, digital certificates provide the validation of identity. A digital certificate is an electronic file issued by a Certificate Authority (a trusted and accredited third party) that acts as evidence of a signer’s identity.
To accommodate different levels of risk, digital signatures are generally categorized into three different classes:
- Class 1 – These certificates offer a basic level of security. They are best suited for environments or circumstances where there is a very low risk of data compromise or identity theft.
- Class 2 – These certificates authenticate a signer’s identity against a pre-verified database. They are appropriate for transactions involving a moderate risk of data compromise and are often used for tax documents or corporate filings.
- Class 3 - These digital certificates are considered the most secure of the three classes. They are reserved for high-stakes matters such as trading, e-commerce, or any transaction involving large sums of money and highly confidential information.
How Do Digital Signatures Work?
Now that we’ve explored the technical components that make digital signatures secure, it is important to understand how these elements operate in tandem to protect your data. Here is a four-step overview of the cryptographic process:
Step #1: Document Hashing
A hash is created from the document’s content. This hash acts as a digital "fingerprint" of the document, capturing its exact state at the time of signing. Even the slightest alteration to the document, such as a single character change, would generate an entirely different hash that makes it easy to detect tampering.
Step #2: Encryption
The signer’s private key is used to encrypt the hash, creating the digital signature. This signature is unique to both the document and the signer, ensuring that the identity of the signer is tied directly to the document. The encrypted hash adds a layer of security, as only the signer’s private key can create it, and only the corresponding public key can decrypt it.
Step #3: Document Transmission
The signed document, along with its encrypted hash (the digital signature) and the signer’s digital certificate, is transmitted to the recipient. This digital certificate contains the signer’s public key and identity information, and issued by a trusted Certificate Authority. At this point, the document is considered tamper-evident, as any unauthorized modifications would invalidate the signature.
Step #4: Verification
Upon receiving the document, the recipient’s system (the digital signing platform used) first verifies the digital certificate by checking its validity and confirming that it was issued by a trusted Certificate Authority.
Once the certificate is validated, the recipient’s system uses the signer’s public key from the certificate to verify the digital signature and recover the original hash (the hash created at the time of signing).
The recipient’s system then generates a new hash from the received document using the same hash function. This is done by reprocessing the entire received document exactly as it exists at that moment.
If the two hashes match, it confirms that:
- The document has not been altered.
- The signature is valid and tied to the signer’s private key.
This verification process ensures both the authenticity of the signer and the integrity of the document, providing a high level of trust and security.
Why Are Businesses Going for Digital Signatures in 2026?
In 2026, businesses are increasingly digitizing their processes, leading to a widespread adoption of digital signatures as the new standard for secure and efficient corporate agreements. Here are some reasons why organizations are increasingly signing with digital signatures:
Tamper Evident Security With Automated Audit Trails
Digital signatures ensure that documents have not been altered since the moment it was signed and each signature is authentic. Agreements signed with digital signatures have tamper evident seals, providing protection against forgery and unauthorized changes.
When using signing solutions like Lexagle, this security is reinforced by automated audit trails. These logs deliver total visibility over the signing progress, providing the transparency needed for peace of mind.
In this age where the proliferation of AI-generated content makes identity verification and document authentication more critical than ever, these security measures act as a safeguard for your business. Audit trails protect your business by providing a history of the signing process that can be admissible in court.
Legally Recognized Worldwide
Digital signatures are widely accepted under international regulations, including the US ESIGN Act and EU eIDAS framework. In fact, as global commerce continues to digitize, an increasing number of jurisdictions are expanding their acceptance of digital signatures, especially with the rise of remote online notarization.
While enforceability can vary based on specific jurisdiction or contract types, digital signatures remain a go-to for a majority of business agreements worldwide — particularly cross-border ones. Modern platforms are designed to navigate these complexities, like Lexagle. Lexagle is fully compliant with major international standards like the eIDAS, ESIGN, and the China Electronic Signature Law, ensuring that your agreements stay valid wherever they go.
Cost Efficiency and Accelerated Contract Cycles
Digital signatures can significantly reduce the time and effort involved in the traditional contract signing process, allowing businesses to conveniently review and sign multiple documents in a day. For example, a leading Philippine manufacturing company used Lexagle for their signing processes. By using the digital signing platform, the conglomerate reduced the time needed for signing, retrieving, and finalizing their international transactions. This helped them achieve a 60% faster document retrieval and a 40% reduction in their contract lifecycle.
Moreover, signing via digital signatures can also lead to direct cost savings. By minimizing manual administrative tasks, eliminating printing costs, and removing the need for physical document handling (e.g., courier services), organizations can lower the costs of their operational overhead.
Environmentally-Friendly
Signing with digital signatures reduces the need for physical paperwork, which reduces paper consumption and waste. This not only supports your company’s sustainability initiatives but also minimizes the environmental impact of wet signature processes.
Overall, digital signatures offer a level of protection and agility that traditional ink and basic electronic signatures lack. The following infographic provides a quick refresher of the key benefits discussed above.
