What is the purpose of a digital signature?

What is the purpose of a digital signature? How does it work? Can electronic signature software really be a safe and legal way of signing documents?

Here, we’ll tell you all about how digital signatures work, their purpose, and who uses them. 

What are the uses of digital signatures?

Let’s start by explaining what a digital signature is.

Digital signatures are a secure type of electronic signature (or eSignature).

They’re the digital equivalent of a handwritten signature and act as a seal of authenticity, proving a document is authorized and legitimate, and that all parties are consenting. 

But how can people be sure a digital signature is valid when the signee often signs remotely?

Well, digital documents can use public key cryptography to secure and encrypt signature data. The only person who can decrypt that data is the signer.

People use digital signatures for many purposes:

The verification of data

Digital signing is a secure method of verifying data.

In fact, because of the public key infrastructure (PKI) used to encrypt digital signatures, they’re more secure than their traditional handwritten equivalent. 

The tracking of documents

Digital signatures make it easier to track and process electronic documents.

They do this in several ways. For example, electronic timestamps help to put documents in their chronological context.

This, in turn, improves workflow efficiency and saves time and money for businesses. 

Tracking eSignatures is also a good way to create an audit trail, which may come in handy during tax season!

Certificate validation

Anyone can make a fake digital certificate. It’s the signature from the certificate authority that makes things official.

Signed certificates prove you genuinely have done the work and got the qualification.

Rather than wasting time and resources signing paper documents and mailing them out, a digital signature is an elegant, safe, and efficient way to verify certificates.

Cryptographic algorithms

The best digital document software uses cryptographic mathematical algorithms to prevent tampering.

This makes digital signatures perfect for validating sensitive documents in a safe and secure way. 

The authenticity of signatures

Believe it or not, digital signatures are actually more authentic than handwritten ones.

Due to the signature algorithms that protect the document, it’s harder to forge a digital signature than one written by hand.

So long as the sender’s private key and the recipient’s corresponding private key aren’t revealed to malicious third parties, everything should remain secure. 

So, if you have sensitive business documents that need a secure type of electronic signature, digital signatures are the way forward.

Who uses digital signatures?

HR teams

There’s a lot of paperwork involved in HR. From new employee contracts to payslips, it’s easy for HR workers to get buried in a pile of pending paper! 

By switching to digital documents with digital signatures, HR departments can make their workflows faster and more efficient.

Rather than having to call employees into the office to sign documents, they can send these out by email and get them back en masse in a matter of moments. 


Governments all over the world, from Japan to the European Union,  are ditching the in-person signing process in favor of digital signature technology.

Having worked out how to create digital signatures in a safe and secure way, they’re now the go-to choice for global governments.

By using digital signature solutions, governments can streamline and speed up all kinds of processes.

For example, the US government uses them for everything from processing tax returns to ratifying laws.

Government employees are even issued with smart cards, which act as a kind of “smart signature”, verifying the identity of the cardholder and granting access to things like government buildings and files. 


Digital signatures are often used by cryptocurrencies to verify the blockchain. But that’s not all.

Transaction data is also authorized by a digital signature, and crypto owners use them to claim their currency. 

Financial sectors

Financial information is highly sensitive, so the financial sector only uses the safest and most secure methods of document signing.

Financiers and finance institutions use digital signatures to ratify contracts, run paperless banking, process loans, set up insurance schemes, and more. 

The financial sector is heavily regulated, but the 2000 Esign Act grants protected legal status to digital signatures.

This, along with the speed, safety, and convenience of digital signing, is a key reason why digital signature solutions are so popular. 

The healthcare industry

Speed is important in healthcare. Often, you don’t have time to send a permission form through the mail to a critical patient’s next of kin.

You need to act immediately. In such cases, being able to email the form and obtain a digital signature can gain crucial time for the patient. 

Healthcare providers also use digital signatures to improve data security and the efficiency of hospital administration

Manufacturing companies

Digital signature schemes can speed up manufacturing processes a lot.

Everything from product design to quality assurance gets signed off on faster with the help of digital messages and certified digital signatures

The use of digital signatures in manufacturing is overseen by the National Institute of Standards and Technology, along with the ISO.

Make the most of your use of digital signatures

Digital signatures are not only a quick and convenient way to authenticate a document.

They’re also handy for verifying a signer’s identity and preserving data integrity. 

If you think a digital signature solution could work for your business, remember it’s important you can trust your service provider.

PandaDoc gives you a totally safe and secure platform to create, customize, and digitally sign legal documents on your terms.