Blockchain and Digital Signatures

Lior Yaffe
Sep 8, 2017 · 3 min read

There is this strange ritual, which in spite of being obsolete, we follow it as if it was a religious commandment. It goes like this, a government office, insurance company, lawyer or any other commercial entity wants us to confirm some contract or action.

Since they already have all the information stored in a computer system, they generate a PDF file or Word document and send it to us by email for signing (thanks god most of us no longer need to use a fax machine).

What happens next is nothing short of amazing. We print the document on paper then sign the document using a 19th-century device also known as a pen to confirm our identity! Then, we scan the document back to the computer and send it back.

Alas, instead of a searchable text-based document, we now have to deal with a large scanned image file, which cannot be indexed or searched. Nevertheless, we trust this manually signed document (which is trivial to counterfeit) to authorize contracts which sometimes represent an obligation to pay vast amounts of money or even life-changing decisions.

Also, think about the environmental impact of wasting all this paper for such an old and primitive use case and all the man hours spent reading these image like documents, which can no longer be indexed and searched.

While digital signature technology, has existed since the 70’s, widespread adoption of this technology is hindered by trust issues and high costs. Software signing certificates still cost 200$/Year and therefore are mostly used by software companies to sign software packages but not by individuals.

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The Nxt and Ardor Blockchains to the Rescue

On the Nxt Blockchain, all transactions are by default digitally signed and time-stamped, and documents (or a hash of the documents) can be stored on the blockchain to provide proof of existence. Connecting your government issued ID card with your NXT account can be accomplished using account properties and information can be encrypted when necessary using encrypted messages. Furthermore, a specific encrypted message can be shared securely with a third party. All this functionality is available out of the box using public APIs based on HTTP and JSON.

Using Nxt and Ardor, you can receive the PDF document by email, hash it and send the hash using a message transaction back to the issuer to provide a signature proof which is impossible to counterfeit as long as you keep your passphrase secured. You can even submit the document itself to the blockchain to store it as a data cloud, a prunable attachment or as a message attachment.

More complicated procedures like multi-signatures can be accomplished using phased transactions which provides a list of required signers to authorize a transaction.

Using these building blocks to create a production-ready, easy to use and scalable identity management system which can be used for digitally signing documents is not simple, but, surely possible.

In fact, Jelurida the company developing the Nxt and Ardor blockchain platforms will be cooperating with governments and universities to make this vision a reality.

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