Electronic vs. Digital Signatures: What’s The Difference?

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We're very excited to have one of our Partners, Pandadoc featured on our blog today. PandaDoc helps more than 5,000 companies close more deals at higher margins with a better quote, proposal, and contract management process. Their document automation features include eSignatures, data management, and feedback to build, edit, execute, and track documents. Internally here at SFCG, we use Pandadoc to help with our document control too! Today we wanted to share one of their blog posts on Electronic and Digital signatures.

Electronic vs. Digital Signatures: What’s The Difference?

In today’s digital world, physically signing a document is cumbersome and, quite frankly, unnecessary. So it makes sense that electronic signatures are the new standard for businesses. They’re quicker, easier, and better suited to a global economy. If you’ve also heard about digital signatures, you’re wondering “are they the same?” Good question! Although similar, they are, in fact, two very different things. Find out the differences between the two, where they came from, and why they matter. First, a little background on each:

Electronic Signature

Also referred to as an e-signature or eSignature, an electronic signature is a verified intent to sign a document. This can be anything from a verbal authorization, an electronically signed authorization, or just checking a box. The authorization is usually in the form of simply typing or signing your name on a document, but it could also be in the form of a sound, symbol, or process that signifies intent to sign, like entering in a numbered code. Technically, the first electronic signatures were sent via the pantelegraph. Developed in the mid-9th century, it was mostly used by bankers to transmit and receive important, signed documents. It scanned, reproduced, and transmitted images over telegraph lines. Basically, it was the precursor to the fax machine, which became a ubiquitous office tool in the 1980’s (may both rest in peace). While the concept of an electronic signature isn’t exactly new, the form has definitely advanced and become more widely accepted. Now, signing and securing digital forms is easier than ever.

Digital Signature

A digital signature contains an algorithm that encrypts the signature to generate a unique signature certificate. It’s a way to encrypt a document with invisible digital codes, making it practically impossible to duplicate or tamper with. The very first algorithm for a digital signature was invented in 1976. The algorithm was primitive, however, and it contained workarounds for anyone who was determined to forge or tamper with a document. It didn’t really prevent outside forgery until the security requirements were defined in 1988. Now, digital signatures can prevent most chosen message attacks and are recognized as the most secure way to sign documents. In a nutshell: An electronic signature is an authorized way to sign a document, while a digital signature is a way to encode a document for security.

But, are they legal?

Yup! Both are legally binding forms of accepting signatures. Electronic signatures are legally enforceable in the US, Canada, U.K., Australia, the EU, and dozens more countries. In most cases, electronic signatures are no different than handwritten ones — the only difference being that one is more convenient than the other. For instance, PandaDoc is compliant with the U.S. ESIGN Act, the Uniform Electronic Transactions Act (UETA), and the European EC/1999/93 Directive, ensuring their legality. We also create a signature certificate with a unique barcode. However, there still are some cases where handwritten signatures are required. In the U.S, tax forms, registration to vote and receiving a new driver license are all instances in which a handwritten signature is still required for legitimacy and legality. But we believe it’s only a matter of time before they also accept electronic signatures, meaning no more waiting in long lines at the DMV!

Final Thoughts

Now that you know the differences and importance of the electronic and digital signature, what can you do with this information? You can create meaningful, legally binding, documents that are quicker and easier for you, and your customers, to sign! Ready to move your business into the cloud with quick and easy electronic signatures? Sign up for your PandaDoc 14-day trial now!