E-Signatures: Is There a Future?

Remember the good old days when a simple handshake was enough to close a deal? It was replaced by the need to have a lawyer verify every line on the page before you carefully put pen to paper and signed your name. Alas, the winds of time are shifting past that old-fashioned pen and replacing your signature on the dotted line with some sort of electronic or digital signature.

Around the globe, governments have recognized the need to protect Internet business transactions by legislating what is or is not accepted as legally binding. Among the nations considering or already having passed legislation recognizing electronic signatures are Argentina, Australia, Canada, Chile, Denmark, Colombia, Finland, France, Germany, Hong Kong, India, Ireland, Italy, Japan, Malaysia, Netherlands, New Zealand, Russia, South Korea, Singapore, Sweden, the United Kingdom and the United States. Plus, various U.S. states are in some stage of recognizing electronic or digital signatures.

"Many states recognize e-signatures for the limited purposes of doing business with the state and state agencies; other states have recognized e-signatures for limited purposes, like filing health insurance claims." explained Larry Zanger, chairman of the information technology and electronic commerce law department of McBride Baher & Coles.

"The U.S. is currently without a general federal e-signature statute; differing bills from the House and Senate are currently in Conference Committee. Various countries have varying rules," Zanger added.

"Digital signatures are the wave of the future," commented eSuccess President Michael Meeks, although he admitted that he's so far only used digital signatures for purchasing software online. Meeks wasn't sure whether anyone in the online gaming industry is actually using digital signatures, yet. He insists, however that the day is coming when many more transactions will be signed using an e-signature.

What exactly is an electronic signature and how does it differ from a digital signature? Zanger explains: "Electronic signatures is the general category that includes any form of electronic authentication - as little as a return email, or a click-wrap, or a digital signature. ... A digital signature is a defined kind of e-signature that implicated the public key methodology."

FOLDOC, an online dictionary, defines a digital signature as "extra data appended to a message which identifies and authenticates the sender and message data using public-key encryption. The sender uses a one-way hash function to generate a hash-code of about 32 bits from the message data. He then encrypts the hash-code with his private key. The receiver re-computes the hash-code from the data and decrypts the received hash with the sender's public key. If the two hash-codes are equal, the receiver can be sure that data has not been corrupted and that it came from the given sender."

(Zanger has put together a PowerPoint presentation that explains how digital signatures work.)

Even the most technically savvy folks, however, might not rely entirely on digital signatures, preferring instead to also obtain a paper copy complete with signatures or other assurances.

"If they're satisfied that the contract is of such minor significance that a non-digital e-signature is sufficient, " Zanger explained, "they are not likely to follow up with paper. If the transaction is more significant, they are likely to require digital signatures or a trading partner agreement that is entered into before they begin online transactions."

There's also the trusty fax machine capable of spitting out the necessary documents. That's how the River City Group handles the signing of any important deals they've brokered, according to CEO Sue Schneider. The company, among other services, brokers the sale of online gaming sites. Like any other real estate deal, there's plenty of haggling, which is accomplished through phone and email, while the actual paper work is signed and faxed as needed.

At the same time, thanks to busy technology developers everywhere, there are still more products available to ensure the authenticity of documents. For example, Wacom Technology (www.wacom.com) has recently come out with two products used with Adobe Acrobat files that use a graphire pen.

"For many of us," said Scott Rawlings, director of marketing at Wacom, "editing documents and putting our 'John Hancock' on important papers with a pen has become routine."

The Wacom products build upon that habit by offering a graphire pen and tablet that reports pressures levels, high resolution coordinates, and time-stamp data, which are needed for accurate biometric signature verification.

Computer Intelligence Corporation (cic.com) has come out with a similar product--a software developer's kit called "iSign"--that allows documents to be signed and submitted electronically. iSign can be used with pen tablets including Wacom, Interlink, and Topaz, as well as Palm organizers and touch-screens.

For the short term, it seems that ink pens haven't been replaced yet, but sometime in the near future they will be. Perhaps it's time to learn more about e-signatures before your pen runs out of ink. Otherwise, you might not be able to respond to an important business deal in timely fashion - at the speed of the Internet.