What is a digital signature and how does it work?

A digital signature is a specific type of electronic signature that uses cryptographic technology to ensure a document’s authenticity and integrity. It’s built on Public Key Infrastructure (PKI), which relies on two related encryption keys:

  • Private key: held securely by the signer and used to create the digital signature by encrypting a unique “fingerprint” (hash) of the document.
  • Public key: shared with recipients to verify the signature and confirm that the document hasn’t been altered after signing.

This process provides verifiable proof of:

  • The signer’s identity
  • The document’s integrity
  • The time and intent of signing

Because digital signatures make any modification detectable, they are widely used in high-security contexts—such as financial transactions, legal agreements, and software distribution—where data integrity and non-repudiation are essential.

Digital signature vs electronic signature

In simple terms, digital signatures are a secure subset of electronic signatures. Electronic signatures are quick and easy ways to show you agree to a document, while digital signatures add extra layers of security and verification, making them more robust but slightly more complex to use.

Electronic Signatures
Electronic signatures include any electronic process or symbol that represents your intent to sign a document. This can be:

  • Type your name,
  • Click “I agree"
  • Draw your signature on a screen
  • Upload an image of it

They are widely used for everyday documents—like employment contracts, sales agreements, or online forms—because they are fast and convenient. Their legality is supported by laws such as the U.S. ESIGN Act and the EU eIDAS regulation.

Digital Signatures
Digital signatures use encryption and digital certificates to ensure both the signer’s identity and the integrity of the document. Each digital signature involves a private key (kept secret by the signer) and a public key (used by others to verify the signature). There are two main types:

  • Advanced Electronic Signatures (AES): Require identity verification and are uniquely linked to the signer.
  • Qualified Electronic Signatures (QES): Offer the highest security, with face-to-face or video-verified identity checks coordinated by an approved authority.

Digital signatures are ideal for sensitive documents such as financial agreements, legal filings, or clinical research data. They provide strong protection against tampering and are legally recognized worldwide.

Electronic signatures are perfect for everyday convenience, while digital signatures deliver the security and authenticity needed for high-stakes or regulated documents. Electronic signatures are quick and convenient for everyday use, while digital signatures provide strong security and authenticity for high-stakes documents.

When to use each type of signature

Electronic and digital signatures serve different purposes, so choosing the right one depends on the security and verification needs of your document.

Electronic Signatures (E-Signatures)
Electronic signatures are best for confirming intent and agreement in everyday documents. They are fast and convenient, making them suitable for:

  • Hiring and onboarding paperwork
  • Customer agreements and consent forms
  • Internal documents or routine business-to-consumer transactions

Advanced Electronic Signatures (AES)
AES adds identity verification to standard electronic signatures, requiring proof of identity like an electronic ID, passport, or driver’s license. AES is ideal for documents with intermediate security needs, such as:

  • Employment contracts
  • Bank documents
  • One-time verification codes for logins

Qualified Electronic Signatures (QES)
QES provides the highest level of digital signature security. It requires verification by an approved Trust Service Provider (TSP) or Certification Authority and may involve face-to-face or video identity checks. QES is most suitable for high-stakes or highly regulated documents, including:

  • Major commercial contracts
  • Sales agreements
  • Mortgage or financial documents
  • Legal or government filings

Electronic signatures represent the act of signing a document, indicating intent and agreement, while digital signatures (AES/QES) provide the secure mechanism that ensures the authenticity of the signer and prevents tampering. For routine agreements, electronic signatures suffice; for sensitive, regulated, or high-value documents, digital signatures deliver the necessary security and legal assurance.