In today’s digital world, the signing process for a paper document is time-consuming, wasteful, and, quite frankly, unnecessary.
So, it makes sense that, with the rise in popularity of electronic documents, electronic signatures have become the new standard for brick-and-mortar and remote businesses alike.
They’re more convenient for the signer, paperless, and ideally suited for any business conducted remotely.
You might have also heard about digital signatures, too.
Which begs the question, “What’s the difference between electronic and digital signatures?”
Good question! While the two share many similarities, looking at digital sign vs. electronic sign throws up plenty of differences.
Let’s dive deeper into the unique aspects of both types of signatures, where they came from, and why they matter.
What is a digital signature?
First, we’re going to explore digital signatures, covering questions like what is a digital signature, how does it work, and when do you need one?
In the simplest terms, a digital signature is a highly secure variant of an electronic signature.
It’s fully encrypted, which adds a layer of security that regular electronic signatures don’t offer.
Digital signatures are created using dedicated software, which awards security certificates proving that the signatures are fully encrypted and secure.
The encryption keys are always linked to the individuals signing documents, preventing unwanted third parties from gaining access.
That’s a quick rundown on how to create digital signatures – but what about use cases?
In many cases, you can simply use an electronic signature tool.
These allow you to sign documents without having to print them (more on this shortly), which already provides enough convenience most of the time.
Examples always relate to needing extra security.
Maybe you’re signing a non-disclosure agreement, for example, or perhaps you’d like to send a highly confidential document to someone in another country for signing online.
These kinds of cases call for digital signatures over electronic ones.
The difference between digital signatures and electronic signatures
In order to fully explore what separates digital and electronic signatures, we’ll take a closer look at the different types of electronic signatures available.
Of course, we’ll also explore digital signatures in more detail.
This will demonstrate what sets the two apart and in which ways they’re similar.
After that, we’ll take a closer look at which ones should be used in which situations.
eSignature solutions
Also written as “e-signature, an eSignature or electronic signature represents verified intent to sign a document.
They can be anything from a verbal authorization to an electronically signed authorization, or just checking a box.
The most traditional form of authorization is simply typing or signing your name on a document, but you can also use an electronic sound, symbol, or process that indicates your intent to sign, like entering a numbered code.
Technically, the first electronic signatures were sent via the pantelegraph.
Developed in the mid-19th century, it was mostly used by bankers to transmit and receive important, signed documents.
It scanned, reproduced, and transmitted images over telegraph lines. Think of it as an early fax machine.
While the concept of an electronic signature has existed for centuries, the electronic form has advanced and become more widely accepted.
Now, digital signing forms are easier than ever and well-suited to the changing landscape of the world.
With the COVID-19 pandemic forcing many businesses to quickly adapt to remote life, signature software is a tool that every industry must now rely upon.
PandaDoc’s type of electronic signature not only keeps deals in motion, but it enables remote organizations to streamline sales, onboarding, training, and much more.
Digital signature technology
A digital signature contains an algorithm that encrypts the signature to generate a unique digital certificate.
It’s a type of signature that encrypts a document with invisible digital codes, making tampering and duplication practically impossible for hackers.
The very first algorithm for a digital signature was invented in 1976.
In its early iteration, it, unfortunately, contained workarounds for anyone determined to forge or tamper with the document.
It was not fit to prevent outside forgery until the security requirements were defined in 1988.
Now, electronic signature laws protect the signer’s identity and support the fact that digital signatures are 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 cybersecurity.
But, are they legal?
Yup!
Both types of digital signatures are legally binding forms of accepting signatures.
Electronic signatures are legally enforceable in the United States, Canada, the UK, Australia, the European Union, and dozens of other countries.
In most cases, electronic signatures are no different than handwritten ones — the primary difference being that signing a document electronically is more convenient than by hand.
PandaDoc’s eSignature solution is compliant with the U.S. ESIGN Act (Electronic Signatures in Global and National Commerce Act), the UETA Act (Uniform Electronic Transactions Act), and the European EC/1999/93 Directive, ensuring their legality.
Our software also generates a unique barcode that emphasizes its certificate authority.
However, there still are some cases where handwritten signatures are required.
In the U.S,. tax forms, voter registrations, and new driver’s license applications are all instances in which a handwritten signature is still required for legitimacy and legality.
However, given the current state of the world, we believe it’s only a matter of time before these institutions begin to accept electronic signatures.
Digital signature vs. electronic signature: Which do you need?
First, it’s well worth noting that the electronic signature vs. digital signature debate is not about which one is better but about which one is more ideally suited to a specific situation.
We’re not trying to argue that any particular type of digitized signature is inherently superior to another.
Instead, we’ll look at which is most appropriate for different documents or situations.
The difference between electronic and digital signatures is significant enough that you’ll want to ensure you’re always using the right one, after all.
We’ve already covered the importance of security when it comes to a digital vs. electronic signature. However, this is also the main factor determining which one to use.
If you’re sending a highly confidential document, or one full of sensitive information, it’s a good idea to use digital signature tools.
These will ensure your document is fully protected and that you’ve hidden any information behind the most robust layers of security.
Not all documents call for this level of protection, though.
For example, you might have to sign an electronic form to confirm receipt of an online purchase.
This only contains details on the safe delivery of your item, which means it’s unnecessary to spend time and effort protecting it as carefully as possible.
As a business, you may also have to ask customers to sign these types of confirmations of receipt, as well as other basic documents.
The best electronic signature software is more than secure enough for any non-sensitive documents, making it the more appropriate choice most of the time.
If you’re a legal professional, you’ll generally find that digital signature tools are what you need. That’s because legal documents tend to comprise sensitive, confidential information primarily.
Final thoughts
Now you know the key difference separating digital sign vs. electronic sign, what can you do with this information?
You can create meaningful, legally binding, digital documents that are quicker and easier for you, and your customers, to sign!
Originally published August 30, 2016, updated June 2, 2023
