Seminar Paper by Réka LIMBEK

Thanks to the pervasiveness of the Internet and Web-based enterprise the role of e-commerce, electronic records, contracts and forms is getting more and more significant in our daily life, and we tend to forget about their old-fashioned paper-based counterparts. We hope that this leads to less paper-waste, quicker service, more efficient business. But much work had to be done to get here. There was the technical problem: to make electronic documents secure in the sense that we know whom it is from (authentication) and it is the intended message (verification). Legal issues also had to be considered. The necessary regulations had been established, so that a "good enough" electronic record is accepted in court, and in general carries the same weight and can be used in the same way as a "normal" one.

A printed record is usually authenticated by a hand-written signature. One's signature is unique, supposed to be difficult to forge so it is also difficult to repudiate. The signature cannot be removed from the signed document and the document cannot be replaced or changed (in principle). Upon receiving a signed document we should be pretty sure of the identity of the signatory and the originality of the document. Something very similar was found for electronic documents, it is called digital signature.

The base for digital signatures is the so called public key cryptography. Until the 70s only private key cryptosystems were used. It means that both communicating parties use the same key when sending or receiving data, that is the key for encoding and decoding is the same. Very simple method, in use from the ancient times, but has one serious problem: how do they get the key at the other end of the channel? Not very practical system if we want to do e-business with thousands of yet unknown people over the internet. But here comes public key or asymmetric cryptography. There is one private key for decoding and one public (related to the private one) for encoding. If Alice wants to send a secret message to Bob then she encodes it using his public key, and he decodes it with his own private key. Apart from Bob no one else can decipher the message, though he cannot be sure who sent this message. If Alice also has a public-private key-pair, then she could first "decode" or sign her message with her private key before applying Bob's public key for encoding. If Bob decodes this message, he can "encode" or verify it using Alice's public key and can be sure that the message was initiated really by Alice.

This is briefly how digital signature works. The signatory sends to the other party the message he is signing together with the signed message. One can verify the signature by applying the signatory's public key to the signed message, then comparing the result with the unsigned message. If these two equals, the message was not tampered with.

One of the advantages of this system is that the public keys are meant to be public, should be listed in directories or can be accessed over the internet. It raises the question of proper maintaining of such a database in order to prevent fraudulent use, however. It is usually done by so called Certificate Authorities. They keep the (public key, identity) pairs, thus certify that that key really belongs to that identity, and, depending on the service regulations, take responsibility for the data, arrange for world-wide accessibility, manage revocation services and so on.

With the help of such CAs one can easily refer to the signatory's public key. But how do we know that there is no (intentional) error in the directory, that a given CA's certificate can be trusted?

Certificate Authorities can be organised in a hierarchy, where on the top stands a very "strong" authority being able to certify the certificates issued by the authorities on the level below. These again can certify the certificates issued by the authorities on the level below, and so on. At the bottom of this hierarchy stand those authorities which do not certify any other authority's certificate only the users' public keys listed in their own directory.

There is another structure looking rather democratic, and, indeed, instead of responsible authorities we have responsible individuals, users. If Alice trusts Bob, that is she personally knows him and believes that his public key is really the one he shows her, then she signs it and publishes this "certificate". Bob's all certificates issued after this are certified by Alice. The resulting web is based on the transitivity of trust. What exactly this trust means and whether it is really transitive can be debated, but it seems that this model works rather well in practice.

The legal framework had to be created to make it possible for digital signatures to become (almost) equal to traditional signatures, thus assisting to the development of information society. Not very long after the European Union Signature Directive was set up, the following steps were taken in Hungary.

In August 2000 the Hungarian Government accepted a resolution ensuring the legal equivalence of digital and hand-written signatures. It means that a record cannot be ruled out just because of the method it was created by. In May 2001 the Hungarian Parliament adopted the Act on Digital Signature that was composed according to the European Union Signature Directive. It aims to establish the legal terms for electronic records to be legally accepted and used. It also determines the conditions under which digital and hand-written signatures should be considered equal. The Act and its executive orders set up the regulations for the e-signature related service providers and control the supervisory activities of the authorities.

The Act describes three classes of signatures.

• Electronic signature: it is basically all data used for authentication, even a name written at the end of an e-mail. The signature cannot be considered invalid just because it is in electronic form.
• Advanced electronic signature: electronic data which is characteristic both to the signer and the signed document. Therefore it represents a unique link to the signatory (cannot be forged), it makes possible to identify the signer, any change in the signed document can be detected after signing took place, and ensures non-repudiation. If the law enforces one to commit to writing then an electronic document signed by an advanced electronic signature will have to be accepted as well.
• Qualified electronic signature: an advanced electronic signature, which was created with a secure signature creation device and was certified by a qualified certificate. An electronic record signed by a qualified electronic signature qualifies as a private record representing conclusive evidence.

In accordance with the EU directive the Hungarian act talks about certificates and qualified certificates. These can be issued by certification service providers which are registered with the Hungarian Communication Inspectorate (the Authority). For giving out qualified certificates the service provider has to obtain a certificate attesting the existence of the staff, technical and other conditions necessary. It includes among many others the seniors' and the employees clean criminal record, necessary qualification, financial background and liability insurance, trustworthy systems and products, ensuring a secure certificate and data storage service, secure and immediate certificate suspension and revocation service. A qualified certificate has similarly many things to bear. It is worth noting that it can contain a pseudonym instead of real identity, if requested.

Sometimes certificates must be revoked. It can be on the user's or the Authority's demand, or if the service provider learns that something is not in order with the user's public key. In this case the Certification Authority must immediately record this fact in its records. Revocation cannot be done retroactively.

All certification service providers must be registered with the Hungarian Communication Inspectorate (the Authority). The Authority keeps a register of the service providers, which must be accessible and continuously available to anyone via public telecommunications networks. It controls and verifies continuously during the operation of the service providers that the service providers comply with the provisions of the Act, the regulations issued, the rules of service provision and the general contract conditions. In the case of non-compliance it takes the measures and applies the sanctions specified in the Act. It ranges from reminding the service provider to comply with the requirements through prohibiting some applications, ordering temporary termination of activities, imposing a fine, to striking off the service provider from its register of certification service providers.

To get to the registry currently costs 830EUR per service. There are three services related to electronic signature:

• electronic signature certification service
• time-stamping
• placement of signature creation data in a signature creation device

When a service provider intends to provide qualified service it has to go through the qualification procedure. The Authority charges 6220EUR for doing this. When a change occurs in the operation of the service provider it has to notify the Authority and the qualification will be performed again for 2073EUR.

From the signatory's point of view digital signatures cost much less. You have to buy an electronic signature creation device with accessories. It is typically a smart card and the hardware to read it. In Hungary it can be around a one-off 100EUR. To have your public key with a Certificate Authority, depending on the service, is at most 40EUR per year.

In the Authority's registry the following service providers are listed, none of them qualified at the moment.

• GIRO Elszámolásforgalmi Rt. (GIRO Ltd)
• Magyar Távközlési Részvénytársaság (MATÁV)
• Microsec Számítástechnikai Fejlesztõ Kft. (Microsec Ltd)
• NetLock Informatikai és Hálózatbiztonsági Szolgáltató Kft. (NetLock Ltd)

Although the facilities are given to create digital signatures in Hungary and legal restrictions concern only family law and law of concession, it is not used very widely. Of course using digital signature is not compulsory and cannot be made compulsory by any law.

The number of applications is still very low. On the other hand all the service providers are non-qualified so a qualified electronic signature cannot be produced with the assistance of Hungarian providers. It is possible to rely on a foreign service provider, though. Its services can be accepted according to the international agreement, if a Hungarian provider assumes liability for its certificates, or, after Hungary joins the European Union, if it resides in a member country of the EU.

It seems that there is a third problem relating to electronic signature, and possibly a fourth, fifth, and many more. It has to get widely known, it should be advertised so to say. People should be used to create and verify digital signatures. A generation of applications has to grow up which is able to embrace this new potential. Not least, the market also has to grow to keep prices down.

Hungary took the first step, and this essay hoped to outline its most important components.