Digital Signature. 

Simply put, a digital signature is the electronic equivalent of a handwritten signature. It is a digital code that can be attached to an electronically transmitted message that uniquely identifies the sender. Like a written signature, the purpose of a digital signature is to guarantee that the individual sending the message really is who he or she claims to be. Digital signatures are especially important for electronic commerce and are a key component of most electronic authentication schemes. Digital signatures are slowly gaining legal acceptance in our country and it is expected that more and more local transactions - from tax returns to banking – will rely on this mechanism to ascertain the identity of contracting parties.

Digital signatures work on the principles of public key cryptography in which two mathematically related keys - private and public are used. Users involved in information exchange are provided a private key which is not meant to be shared or transported over a network. Instead there is an associated public key available issued to other parties, usually through an authorized website. A piece of information encrypted with one of the keys can be decrypted only with the other key thus eliminating the need to transfer passwords. Pragmatically, an electronic transaction involving a digital signature or a public private key technique between two people would translate into something like the following: if Tom wants to transfer a file or send an e-document to Harry, he will encrypt it using a public key. Harry's public key is available to Tom (being a public key). The file can be decrypted with the other related key only that is Harry's private key which resides only with him. Here the public key algorithms are written in such a way that while one key is used for encryption the other key decrypts the same message. This is made possible through the mathematical relation between the two keys. Basically anyone of the public or private key can be used for encryption, while the other one is used for decryption.

With the security part taken care of, the question remains how do digital signatures take into account the authenticity of the sender? Digital signatures allow the sender to place a kind of stamp along with the sent file which allows the receiver to verify the sender's credibility. This is made possible by creating a 'hash' of the file. Hashing is a technique that compresses lengthy data through an irreversible process. Once the hash is created, the sender can apply his own private key to encrypt the hash - thus creating a digital signature. The receiving party can apply the sender's public key to the digital signature and retrieve the file hash. At the same time, the receiver can independently compute the hash of the received file and compare it with the decrypted hash of digital signature – if both the hashes match, not only is the sender authentic but the integrity of the file is also verified. A sender can append a digital signature to an unencrypted file as well as to an encrypted file. Digitally signed encrypted transactions require decryption at the receiver's end using the sender's public key, prior to the verifica1ion of the digital signature.

Digital signatures allow non-repudiation of an electronic transaction. This means that a sender can not deny later on that he or she had sent the message. This is possible because a digital signature is only possible with a private key, which resides only with the sender.

But that's not all there is to digital signatures. Digital signatures also minimize the chances for impersonation. For instance, even if a malicious impersonator intercepts an electronic transaction, he or she cannot gain access to the sender's private key. However the impersonator can pretend to be the sender and apply for a new public key and thus replace the real sender's initial public key in the public records with his own and acquire a private key for himself..  Now when the intended receiver gets a file digitally signed by the sender, how can he be sure that the public key he is going to use is authentic and belongs to the real sender and not to an imposter? This is where the Certification Authority (CA) comes in. CA is a trusted third party that certifies public keys for individuals so that other individuals can rely on them.

In order to understand the role of a certification authority, let us revert to our previous example of Tom and Harry. Let us assume that Dick is a third party whom both the sender (Tom) and the receiver (Harry) trust. Dick digitally signs Tom's public key along with some other personally identifiable information - the process is called issuing a digital certificate. When Harry receives a digitally signed file from Tom, he first applies public key of Dick to decrypt the certificate which contains details on Tom as well as his public key. Using this public key, Harry goes on and decrypts the digital signature. From now on if Harry receives a message which is apparently signed by someone named Tom but doesn't contain a certificate issued by Dick, he won't entertain the message, Gradually, other people in the community will start trusting Dick as they know he issues certificates only after thorough background checks.

And the chain goes upward too - say there is somebody else called Kathy who , certifies Dick. This is, useful in wider areas of communication where Dick is not I known, so nobody trusts his certificate but they do trust Kathy who has an intercontinental acceptance. In this example Dick and
Kathy represent CA J with rising levels of trust.

With all these encryption and certification techniques is it sate to assume that digitally signed electronic transactions are foolproof? Apparently not. Even if they are encrypted, they are not safe from malicious attackers spying on a network.

These attackers can strike with a reply attack and re-send whatever the original sender sent allowing the receiver to believe that he is still communicating with the sender. Consider a case where Tom ordered 100 top of the line computers from Harry's online store - a reply attack of this order will result in an additional 100 computers being ordered. And on top of it, Tom can't deny it either, when a perfectly legitimate looking order arrives at Harry's end - as digitally signed transactions don't allow non-repudiation. Such cases can have severe implications in banking and other financial sectors. The receiving party can counter these by issuing unique session tokens to be used only once or using other techniques like Message Authentication Code (MAC) and time stamping et cetera.
Even with these precautionary measures in place, the integrity of electronic transactions can still be compromised through a collision exploit in the hash algorithm which would result in the same hash being computed for an altered message - thus faking digital signature. To counter this, certification authorities, sending and receiving parties have to continuously collaborate with research institutes to ensure that they are using the latest and algorithms with safe keys and working in a fairly secure implementation framework.

Other areas of concern regarding the implementation of digital signatures pertain to the strength of the private keys, should users be allowed to generate their own key pairs and hQw to secure them at the user's (which includes organizations too) end.

Until security of private keys doesn't meet. some set criteria, chances of impersonation are very much there, thus raising questions about the effectiveness of digital signatures. Another key issue is private key escrow - or key escrow for short. The need for this originates when governments do not want to allow strong encryption outside their own control. It may ask users or certification authorities issuing legally binding certificates to keep 'a copy of their private keys with a trusted agency or to provide on-demand access. Certificate revocation by CA is also a possibility in case a user claims his private key has been lost or compromised. In this case, it is very important for the receiver to know if the sender is using a revoked certificate.

_{source Spider Mag.}