A digital signature is a mathematical technique used to verify the authenticity and integrity of a digital document, message, or transaction. Unlike a simple electronic signature (like a scanned handwritten signature), a digital signature uses encryption to ensure:
- The sender is who they claim to be (authentication).
- The document has not been altered after signing (integrity).
- The signer cannot deny signing it later (non-repudiation).
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The Role of Digital Signatures in the Electronic Transaction Act
Digital signatures play a critical role in modern electronic transactions by ensuring security, authenticity, and legal validity in digital communications. The Electronic Transaction Act (ETA) in many countries (including Nepal) recognizes digital signatures as legally equivalent to handwritten signatures, enabling secure online business, government services, and contracts. Below is a detailed explanation of their role under such laws.
A. Legal Recognition (Like Handwritten Signatures)
- The ETA grants legal validity to digital signatures, meaning:
- Contracts, agreements, and official documents signed digitally are as enforceable as paper-based ones.
- Courts accept digitally signed documents as evidence.
B. Security & Fraud Prevention
- Digital signatures use Public Key Infrastructure (PKI), which involves:
- A private key (only the signer knows it).
- A public key (used to verify the signature).
- This prevents:
- Tampering (any change invalidates the signature).
- Impersonation (only the real signer can use their private key).
C. Authentication (Proving Identity)
- Before issuing a digital signature, a Certification Authority (CA) verifies the signer’s identity (e.g., through government IDs).
- This ensures that:
- A bank, government agency, or business can trust the signer’s identity.
- Prevents fake signatures in online contracts, tax filings, or land records.
D. Non-Repudiation (Cannot Deny Signing)
- Since only the signer has their private key, they cannot later claim:
- “I didn’t sign this!”
- This is crucial for:
- Business agreements (e.g., digital contracts).
- Government e-services (e.g., tax filings, license applications).
E. Efficiency in E-Governance & Business
- Digital signatures eliminate paperwork and speed up processes like:
- Online company registration.
- Digital land transactions.
- E-filing court documents.
- Banking & financial agreements.