Electronic signature: everything you need to know about this topic!
Even though the electronic signature has been around for a while and is widely used in countries like the United States, it is still not very popular in places like Brazil. Since many people still don’t understand how it works, either from the technological or from the legal perspective, there is a certain fear of fraud or that the signed document will not be valid.
If you are interested in the electronic signature but still have some doubts about how to implement it in the day to day of your company, this post was made for you! In it, we will answer the most frequently asked questions on the subject to explain what this signature is, how it works and what its legal validity is, as well as show its advantages and some cases where it is being used with the help of blockchain. Let’s go?
What is the electronic signature? Is it the same thing as a digital signature?
To put it simply, the electronic signature is any kind of signature that is done by electronic means. It can be done in a variety of ways, using evidence such as SMS and e-mail verification, IP address of the device used, user photos, signature with a touch pen, among others.
It is worth noting that, although the terms are very similar, the electronic and digital signature are not the same thing! While the former can be done by any electronic means, the digital signature requires the use of specific protocols, such as the ICP-Brasil Certificate in Brazil. In it, the certificates have two cryptographic keys, one public and one private, with the first one is being from Certification Authority and the second, linked to each individual user.
Does it have legal validity?
Yes, it has full legal validity. In Brazil, for example, it is given by the Provisional Measure 2200-2/2001. According to it, the electronic signature has THE SAME VALIDITY of the signature made on paper – thus, it can be used in any case that a conventional signature suffices.
In some cases, however, the law requires the contract to have a specific form and signatories to go to the notary to certify their signatures. When this happens, a simple electronic signature is not enough (just as a simple paper signature is not enough). What should be done then is the digital signature, which, by being stronger and following the protocols we mentioned here, replaces the procedure at the notary.
It is worth remembering that, according to the Brazilian Civil Code, contracts are usually of free form – that is, unless the law EXPRESSLY states that a particular form must be followed (for example, as in the case of the sale of real estate), you can make the contract in whatever manner you choose. Thus, the electronic signature is sufficient for all cases, except for those in which the digital signature is specifically required.
Is the electronic signature secure?
Regarding security, we end up having a funny situation, since the electronic signature is actually safer than the one made on paper! It seems counterintuitive, doesn’t it? Paper documents, even if they are not very practical, give the impression of being safer because you can see the other person signing it in front of you, check their documents and be relatively certain that they are who they say they are (and not an impostor trying to deceive you). Moreover, a paper document is often seen as safe because it is physical, and can literally be taken to the courts in case of problems.
However, as we will show here, the technology – especially blockchain technology – has evolved to such an extent that today we can make the electronic signature with even more security guarantees than the conventional one.
What are the advantages of electronic signatures?
The benefits of electronic signatures are many, mainly for improving processes, contributing to greater agility and efficiency, and increasing safety.
Making contract signing more efficient
Imagine that you are a company based in the US and need to sign a contract with a customer in China, or that you are a Brazilian startup that decided to hire developers in Europe. Having to be physically present to sign contracts can be a problem, especially now that business and transactions are done with parties from all around the globe.
And even if all the signatories are in the same city, they need to meet up to sign the contract, which can take a lot of time, especially when there are several parties involved. A property rental agreement, for example, typically requires the signature of the real estate agent, the lessor, the tenant, and the guarantors – a process that normally takes HOURS but that with the electronic signature can be reduced to minutes. According to the Exame magazine, the processing time of documents to complete a business can be reduced by up to 97%.
The increase in efficiency, in turn, not only helps businesses to be completed more easily but also leads to more satisfied customers and employees. So, everyone wins!
Cost reductions and savings
The electronic signature, as we have shown above, saves time and, consequently, money – which is already great. But it also brings savings in other ways. Expenses related to the production of paper documents and their storage and management can be reduced and even eliminated!
It may not sound like much, but companies do, in fact, spend LOTS of money on paper, printers, manual shipping, warehouses and employees to take care of the mountains of folders and documents. I mean, they used to… With the electronic signature, all this can become a thing of the past. The planet will be grateful!
And what does blockchain have to do with this?
Blockchain, a new distributed and decentralized database, can help to make electronic signatures even more convenient and secure, especially through the creation of verified identities and the assurance of immutability of digital documents.
With blockchain, it is possible to create a verified identity for users. So, unlike, for example, a social network in which you can create multiple profiles with whatever information you want, in the blockchain ID a validation is done in order to prove that you are yourself.
In Ethereum Classic Summit 2018, Edilson, the CEO of OriginalMy, spoke about identity, authentication, and proof of authorship using the blockchain. Check it out the video below!
Imutability of documents
One of the most interesting aspects about the blockchain is that once the data is registered in the system, it can’t be changed. Thus, one gains more security, since the possibility of one of the parties maliciously changing the contents of the contract after the signature ceases to exist.
This is because every time a file is registered on the blockchain, it gets a timestamp that accurately tells the date and time when it was added to the system. In addition, a hash is calculated (a kind of DNA from the digital document), and if any changes are made to the contents of the file, the new hash will not match the original – alerting the parties that some modification has been made.
The blockchain thus helps ensure the integrity and authenticity of your documents and contracts.
More security and production of strong evidence in case of a legal dispute
The blockchain-based electronic signature can also help in case of eventual legal dispute.
In more complex contracts, it is common for lawyers to spend a considerable amount of time negotiating, making modifications, and changing clauses. In these scenarios, it is not uncommon to have a mismatch in the final version of the document, which can lead to legal disputes, in which both parties believe that THEIR version of the agreement is the valid one. This problem doesn’t exist if the document is signed using a blockchain ID since there is only ONE version of the file in question.
Finally, since the procedure for making the electronic signature involves more steps than the paper equivalent, such as the creation of verified identities, it is practically impossible for one of the parties to claim that it was not the one who signed the document, or that only did so because it was coerced or victim of fraud.
Digital signing of contracts with OriginalMy
With OriginalMy, you can electronically sign your documents in a quick and easy manner. Through our Blockchain ID, you can create your verified digital identity and sign contracts and various documents, whether they are civil union contracts and real estate leases or documents to ensure the protection of your intellectual property.
You can have more details about signing civil union contracts in the video below. It has English subtitles, so make sure to check it out.
And in this video here you can learn more about the possibilities that blockchain can bring to musicians and composers, including the signing of documents to ensure their copyright.
A reminder: OriginalMy does not store the personal data used for identity verification and does not have access to the contents of clients’ files and contracts. The company is only responsible for calculating the hash of the submitted documents and registering the numeric code generated in the blockchain.
In this post we talked about the reasons for adopting electronic signatures in your company, explaining benefits such as cost reduction, increased data security, risk and fraud reduction, more agility and improved customer relationship, as well as how validation works in Brazil.
So, what are you waiting for to get rid of the bureaucracy of having to sign paper documents? Bring your company to the digital era too!