Each year more of the daily business of American life "goes digital." Millions of people now get some or all of their news and entertainment via the Internet. Millions more file their federal tax forms electronically. Researchers and students routinely "surf the web" for information that once required long hours in dusty libraries. A relatively small but rapidly growing number of people buy goods and services electronically--most notably books, music, and stocks.

But there is a built-in limit to the transactions we can conduct on the Internet: the inability to execute legally binding documents, whether it is signing a sales agreement or an application for a driver's license or filing a will. These still require personal authentication via written signature.

The technology already exists to replicate this personal authentication electronically, through a "digital signature" executed with a "digital certificate"--basically, an electronic pen that uniquely and securely identifies the user. The digital certificate would reside in each person's computer hard drive or on a "smart card"--an electronically imprinted data card--and would produce unique digital "signatures" that would make transactions even more secure than those executed with a written signature backed up by a driver's license.

And who would issue the "digital certificates?" Well, which public agency is currently in the business of collecting enough personal information on citizens to give them a reliable ID to support legally binding signatures? That's right, the state Departments of Motor Vehicles (DMVs) who issue driver's licenses.

With the personal data they already collect, state DMVs can create "digital certificates" and embed them on "smart cards." These cards could also, at the option of the recipient, bear digital imprints with additional personal information, along with banking, credit, or even voting data. The security of such digital information is superior to that of the wallet-held driver's license or credit card, and could be instantly canceled and reissued in the case of theft. States have a strong motive to instruct their DMVs to move in this direction, since it will make it possible to provide many services on-line, reducing the cost of government. (DMVs need to ensure that everyone can obtain digital certificates, but citizens will be able to get them from private vendors as well.)

In a new Progressive Policy Institute (PPI) report, Jump-Starting the Digital Economy, Marc Strassman and Robert Atkinson lay out the DMV strategy for issuing digital credentials, and address all the economic, security, and privacy issues involved. This needs to become a big political issue in the immediate future. Americans deserve full access to e-commerce and e-government services that digital certificates could make possible. There is no good reason on earth, or in cyberspace, that policymakers should deny them.