By giving the Digital Signatures Bill its approval last Wednesday, the US Senate has paved the way for the use of digital signatures to become more widespread.

The use of digital signatures has long been vaunted as the next step in making e-commerce a more certain and secure means of conducting business. The anonymity of the internet makes the risk of fraud in electronic transactions all too real. Digital signatures use asymmetric (i.e. public/private key) cryptography to enable the recipient of an electronic communication to identify its sender. In this way companies can have confidence that the opposite party in any given on-line transaction is who they think it is.

The Hong Kong government has been quick to support digital signatures by enacting the Electronic Transactions Ordinance, the first provisions of which came into force in February this year, and by taking steps to set up an infrastructure under this Ordinance to support the use of digital signatures. In this regard, the Electronic Transactions Ordinance appoints HongKong Post as a "recognised certification authority" capable of confirming the validity of digital signatures by verifying that the public key used by a recipient to decrypt a digital signature is that of the sender.

However, the introduction of the Electronic Transactions Ordinance by itself is not sufficient to cause a revolution in the business community in Hong Kong. The internet is a global means of conducting business and, accordingly, the real benefits of digital signatures will not be felt until a global infrastructure has been put in place which allows digital signatures of Hong Kong companies to be validated by their overseas partners (and vice versa).

The reality of a global infrastructure is, however, still a way off. Europe has made genuine progress in this area with a new technical standard for digital signatures in accordance with the European directive on digital signatures having been published by the European Telecommunications Institute last Thursday. However, a truly global infrastructure must include the US, which is why the passing of the Digital Signatures Bill is important for Hong Kong. It should be noted, however, that the passing of this legislation is merely a first step, as it only provides the framework within which certification bodies can be set up in the US. The real work of setting up such bodies has yet to take place.

First published in SCMP Technology Post on 27 June 2000.