Tezos DigiSign, a new standard for timestamping and electronic signatures on blockchain

By Allen Walters | Publish0x posts | 31 Jul 2020

Blockchain-based solutions for existing real world processes that will simplify and reduce expenses both in time and money: these are the developments that will have the biggest impact and will bring people and companies from outside cryptoland to utilize blockchain. Not necessarily to use blockchain directly, but to enjoy the advantage of on-chain solutions and thus drive on-chain adoption.

One of these blockchain based solutions is creating and recording of digital signatures for digital documents on blockchain. Cost reduction for this process: a whopping 15 to 70 times cheaper. And since this is a $3 billion dollar market, there's a lot of money to be saved.

Digital signatures
Moving totally away from paper documentation to digital documents has a lot of advantages. The digitization of documents makes it unnecessary to print documents, do physical mailing, have physical meetings between signatories and other constraints.
But it also presents a new issue: digital documents can be simply forged or altered and thus we need to be able to prove authenticity.

The solution is the creation of a digital signature for documents. This is a mathematical signature: a set of characters that is mathematically traceable to the document. As soon as the document is altered, the signature does not match anymore. (More about the technicalities later)

Analysis of the market and advantages of a blockchain-based solution
The digital signatures market exceeds a total value of $3 billion this year. And moving this market towards blockchain has a lot of advantages. The advantages are summarized in a white paper that analyzes the feasibility of this subject. This white paper has been recently published by the French law firm Solegal and BlockchainEZ
"The usefulness of the electronic signatures on public blockchain for large accounts: interest, feasibility and legal value."
The advantages of the electronic signatures on blockchain [...]:
- Drastic cost reduction: the electronic signature on blockchain can drastically reduce the unit cost of signing a document. In a context of massive and unilateral signature (ex: signature of thousands of outgoing invoices), we estimate that the unit costs can be divided by tenfold;
- Public proof: the proof becomes public, a third party can easily go and verify the authenticity of a signature. In addition, how this proof and the underlying blockchain work, is the same in all countries of the world, for all its users;
- Confidentiality: it is no longer necessary to send documents to trusted third parties. Blockchain only stores the evidence, so the document remains confidential on your network;
- Universal format: the electronic signature on the blockchain allows you to sign all types of documents (pieces of music, photos, architectural plans, etc.), whatever the format (not only PDFs). In addition, the document does not transit over the networks, there is no longer any limit as to the size of documents that can be processed;
- Durability: the initial signature is sufficient in itself, it does not expire over time. This is an important difference between signatures and certificates, from which the latter must be renewed regularly and must be checked for term-bound validity;
- Non-dependence on a third party: the blockchain approach avoids the use of a trusted third party and associated risks: risk of bankruptcy, changes in product or pricing strategy and security breaches.

To put it short: smartcontracts and public blockchain provide the possibility to automate processes, eliminate the need for third parties, while providing a trust-less and immutable, time-stamped record and without the need to reveal the actual document outside your private network. There is no other system that provides these qualities. Moving the process to blockchain is a natural step to take.

Furthermore, the whitepaper argues that digital signatures on blockchain are legally binding and hold up in court.

The paper suggests Tezos DigiSign as the blockchain solution of choice.

Tezos DigiSign
Created by Sword Group in cooperation with Nomadic Labs, Tezos DigiSign brings this market to the Tezos blockchain. The open source DigiSign standard, is a set of smartcontracts that enables you to to create time-stamped, digital signatures on the Tezos blockchain, completely in line with European regulations. The standard is developed by Swordgroup, in cooperation with Nomadic Labs. Sword Group has a lot of expertise in this area, and previously worked with Bitcoin and Ethereum as blockchains of choice. But after reconsideration and after reviewing feedback from several big public institutions, it became clear that certain aspects were up for improvement. Ideally, they were looking for "a blockchain that is ecologically responsible, and with a clear [transparent] governance." Also the desire to be able to audit [formally verify] smartcontracts, was an important reason to take a more serious look at Tezos.

As a result, Tezos DigiSign was developed, an opensource project explicitly to be used for free by as much developers and organizations as possible. Main reason: standardization.

One of the biggest applications that has implemented and uses Tezos DigiSign lately is "Avis Clients Blockchain". This is a company that offers authentication of customer reviews by use of DigiSign. A few days ago, Avis Clients Blockchain signed an important new client "Plus Que Pro" with 15 million unique visitors per year.

Avis Clients Blockchain was able to offer certified reviews 15 to 70 times cheaper than before using DigiSign.
This cost result emphasizes expectations mentioned in the white paper quoted above.

How does it work?
Signing and authenticating is done through hashing functions. (In a follow-up on this article, I will provide a thorough explanation about what hashing is.) To put it short: a hashing function is a mathematical algorithm that reduces any digital file into a fixed amount of characters. DigiSign uses SHA256, which means, this turns files into a set of 64 characters. This is the "hash". You can store these hashes on a public blockchain without the risk that people can find out what the original content of the full file is: the hashing function is "one-way". While it is simple and fast to go from the file (the input) to the hash (the output), you can't derive the original input from the output. Not that important when you store customer reviews, but very important for certain other use-cases. Another important advantage is that you do not need to store large files on the blockchain. Only the hash. 

The registration of a transaction in the blockchain requires the use of an encryption system by asymmetric cryptography. This is the same principle as used for traditional electronic signature solutions with trusted third parties. Additionally, the tezos blockchain natively includes a time-stamping mechanism.

Because the mathematical output of a certain document is always the same, you can now check the authenticity of signed documents. Just like 1+1= always 2, and 1+2= always 3. Document A always has hash 1, and document B always has hash 2. If you want to check a document for authenticity, you have to calculate the hash of the document using SHA256, then request the blockchain to see if the hash is present. If the hash is present, we can associate its origin with the holder of the tezos key who issued the transaction.

The signature can also be traced back to a specific time. The transaction on the blockchain itself carries the document timestamp. This way you can proof a document existed in a certain composition at a certain time. Which can be very important in numerous examples. Who deposited a certain idea first for patent? When were certain legal agreements established? Etc. 


Tezos DigiSign and the creation of digital time-stamped signatures on the Tezos Blockchain is a very promising development and something to keep an eye on for future developments.


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Allen Walters
Allen Walters

Fascinated by blockchain and future proofing cryptocurrency. Discover the tech before it gets relevant. Twitter: @IgnoranceIt

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