What is a digital signature and how does it work

What is a digital signature and how does it work

Remember the time when electronically signing a document meant printing, signing, and scanning the document before emailing it back?

Yeah, it was as tedious as it sounds.

It wasn’t long before eSignatures were introduced. You’d simply type your name or attach a picture of your signature and send the document back.

If you’re cringing at the security risks of such a practice, you aren’t alone. The fear and the lack of security led to encryption based signatures shortly after.

Today, the most secure form of an eSignature is a digital one.

Digital signature 101: What is it and how does it work?

At the heart of it, a digital signature is confirmation of the signer’s identity. It checks that the electronic document is signed by the person it claims to be from and that it hasn’t been tampered with in any way since it was created.


It’s like an electronic signature that’s coded and encrypted. Just as easy to use but with none of the security risks.

Think of it this way: your signature is a locked box that requires two keys to open. If the keys don’t match, an alarm will go off, red lights will start flashing, the doors will shut close, and the FBI will burst through the windows to apprehend you.

Now obviously, that’s not going to happen but if the keys don’t match, the sign is invalidated, and the other party is notified.

Behind the scenes of digital signature signing

Your digital signature comes with two encryptions keys — one public, one private.

The public key is available to anyone who wants to send you documents to sign. You’ll use the private key to sign the document. If the keys match, the sign and document are validated, and things move forward smoothly.

If the keys don’t match, the person sending or receiving the document knows your identity has been compromised.

Sounds complicated, right? We’re not going to sugar coat it. It is complicated. The good news is, PandaDoc handles the behind the scene technicalities of digital signatures for you.

All you need to do is drag and drop a signature field in your document and send it to the other party for signing. As soon as they sign, you get a notification.

It’s that simple.

Benefits of digital signatures

They save time

Gone are the days when you had to wait days for someone to courier or scan, and email signed documents to you. Now, it’s just a matter of signing and sending.

There’s no downloading, printing, couriering or any of the myriad other time-consuming steps.

You can send proposals, sign contracts, and close the deal in just a matter of minutes.

They’re more secure

Signing on paper may feel more tangible, but it isn’t more secure. A handwritten signature can be forged, and the document itself can be tampered, misplaced, or even destroyed.

Digitally signed documents don’t just authenticate the identity of the signer but also make sure the document isn’t changed in any way.

Reduce costs

Businesses can save a small fortune by going paperless. The amount spent stationary, printer, ink, courier, etc. all go down.

Are digital signatures legal?

In 2000, the US passed a federal law called The Electronic Signature in Global and National Commerce Act (ESIGN) and The Uniform Electronic Transactions Act (UETA). To paraphrase, these laws state that electronic signatures have the same legal standing as pen-and-ink signatures.


Worried about notarizing your signature? eNotaries take care of that through digital certificates.

Luckily for you, PandaDoc has a digital certificate issued by the Certification Authority that notarises all its digital signatures.

In short, digital signing of documents is entirely legal. Count this as another benefit of digital signature signing.

Looking for more legal certainty to start using electronic signatures? Learn more about documents that can be signed with e-signatures in your country:

  1. The United States
  2. The United Kingdom
  3. Australia
  4. Canada
  5. Switzerland
  6. South Africa

The different types of digital signatures

Most programs support digital and electronic signature and allow you to create one for yourself.

They might use different types of signatures, but the essence remains the same – they ensure the security of your document. Two popular softwares that create digital signatures are Adobe and MS Word.

Adobe PDF has two types of signatures: ‘Certified’ and ‘Approval’.

A certified signature is done by the author of the document. It helps prevent the document from being edited or tampered. On the other hand, approval signatures capture the approval of the concerned parties and embed them in the document.

Similarly, MS Word has ‘Visible’ and ‘Non-visible’ documents.

A visible signature denotes a line on which the party must sign. A non-visible signature is used in those documents that don’t need to be signed but must provide assurance of the authenticity of the document.

What do these different types of digital signatures mean for you?

Not much, unless you’re working with these programs.

If you’re using PandaDoc, you don’t need to worry about the different types of signatures. All you need to do is include the signature and send it for signing. The other party will then choose whether they want to type, draw, or upload their sign to your document.

What is a digital certificate and how is it different from a digital signature?

Remember how a digital signature has a public and private key for security and verification?

A digital certificate is what connects your public key to you and confirms your identity. Without it, there’s no way to check whether the two keys even match. It’s what binds the keys to their owner.

A digital certificate is issued by a Certificate Authority and contains three things:

  • Your public key,
  • Certificate information, and
  • Digital signature.

A digital signature, on the other hand, is the equivalent of a handwritten sign on a paper and verifies the authenticity of an electronic document.

Just how secure is a digital signature?

Think of your digital signature as a fingerprint. Uniquely yours and almost impossible to impersonate.

But unlike a fingerprint, a digital signature also captures additional information for added security. It authenticates and records the identity of the person signing, the name of the document being signed, as well as the date and time of signing.

Once the document is signed, it cannot be changed. Any attempt to do so renders the sign and document invalid.

Creating a digital signature in PandaDoc

Wondering how to do a digital signature?

Our eSignature feature is a simple 3-step process.

  1. Upload the document and scroll down to where you want to get the signature.
  2. Select a ‘Field’ from the menu on the right and drag it to where you want the signature to be.
  3. Assign the field to the contact who needs to sign it and send.

PandaDoc offers three styles of signatures and lets you select which one you want to assign to the document. You can choose all three if you want to give your contact a choice in the matter.

The three styles are:

  • Draw – Using the mouse to draw a sign.
  • Type – Choose from 6 available font styles.
  • Upload – Select an image from your computer and upload it.

Using digital signatures in your business

Every successful business requires a fast and efficient document organizing and signing system.

PandaDoc eSignature feature automates the document signing process completely. It’s legally binding, is easy to use (just click and choose your sign), and uses the same encryption that financial institutions around the world use to protect their data.

What’s more, not only is there not a limitation on the number of signatures you can get done in a month but there’s no additional fee for this service either.

Bethany Fagan

Bethany Fagan Content Marketing Manager at PandaDoc

Bethany is the Manager, Content Marketing at PandaDoc. She has over 10 years in the sales and marketing industry and loves crafting new stories and discovering new content distribution channels. Outside of the office, she spends her time reading, working out at Orangetheory or trying a new Brooklyn brewery with her husband and two French Bulldogs, Tater Tot and Pork Chop.

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