Three years ago, just as the Internet bubble burst, Congress passed a law that was supposed to usher in a new era of e-commerce, one in which a wide variety of transactions would be sealed by a digital signature. For a host of technical, legal, and cultural reasons, almost nothing happened. But now, notaries public, the keepers of one of the nations' hoariest legal traditions, are getting ready to move into the digital era, opening the door to much broader use of e-signatures on contracts and other documents.
The digital signature most likely to dominate will strongly resemble the pen-and-ink kind. On May 28, the National Notary Assn., a professional organization of more than 200,000 notaries, will endorse a new system called the Electronic Notary Journal of Official Acts (ENJOA).
This will let notaries use computer files instead of paper logbooks to record their witnessing of official signings. The $550 ENJOA hardware-software package will save a digital record of the signature along with the notary's records and supporting information on signers, including digital photos and thumbprint scans. The heart of the system is Interlink Electronics (LINK)' ePad, a device that resembles those used to sign credit card transactions at retailers such as Home Depot (HD) but which provides greater protections against forgery. Legal documents themselves remain overwhelmingly paper and will be signed the old-fashioned way. But the ability of software such as Adobe (ADBE) Acrobat to add digital signatures to facsimiles of paper documents means that full electronic signing is not far off.
This is not the way most advocates of digital signatures expected things to work out. Three years ago, the dominant notion involved a mathematical procedure known as public key cryptography. Cryptographic signatures were designed so that they would not only positively identify the signer but would guarantee that the document had not been altered in any way since being signed.
It was a technically elegant solution, but its unfamiliarity was a huge drawback. Nothing about the signature itself, which appeared on an electronic document as either an icon or as a long string of random characters, resembled a "real" signature. Furthermore, for the process to work, the recipient of a digitally signed document had to verify the signature by checking the signer's "public key" -- another long string of characters -- against a database of keys maintained by a trusted third party. Companies such as VeriSign (VRSN) and Entrust (ENTO) provide public key services, but the mechanisms to assign keys to individuals have not developed.
Although we may be years away from a time when a digital key becomes a common part of anyone's identity, cryptographic signatures do play a vital role in e-commerce. For example, when Web browsers load secure pages, they check a signed digital "certificate" to make sure that the page on which you enter your credit-card number really does belong to Amazon.com (AMZN) Businesses that do extensive online commerce use public-key signatures to validate purchase orders, invoices, and other electronic contract documents exchanged with their partners.
For signing actual documents, however, it's much more likely that a system based on digitized handwritten signatures will prevail. Devices such as the Interlink ePad do a lot more than just capture an image of a signature. They measure both the pressure and velocity of the stylus tip as you sign, which makes forging a signature difficult. Both images of the signature and the collected data can become part of the electronic version of any document signing.
Still, it will probably take some time before that stack of papers you face at a real estate closing will be replaced by a digitally signed electronic document. The rituals of signing documents have their roots in antiquity and won't change quickly. "The speed at which it happens will depend not on the technology, which is already here, but on its acceptance," says Milton G. Valera, president of the National Notary Assn. At last, however, we do seem to be moving forward. By Stephen H. Wildstrom