Securing digital assets: What is HSM and MPC technology?

Terms like Hardware Security Modules (HSM) and Multi-Party Computation (MPC) technology are thrown around a lot in the blockchain industry, especially when entering the realm of digital asset custody. Two pivotal technologies at the forefront of safeguarding assets that often appear without explanations. Let’s change this today and take a look at the sophisticated mechanisms protecting private keys and sensitive data.

Hardware Security Modules (HSM): The Digital Fort Knox

Hardware Security Modules (HSM) are physical devices designed to secure cryptographic keys and perform encryption operations within a tamper-resistant hardware environment.

HSMs are not just about locking away digital keys; they are about enabling secure operations while keeping those keys out of reach from unauthorized users. They are:

• Ensuring that private keys never leave the protected confines of the HSM,

• Facilitating fast and secure transaction signing,

• Providing robust resistance against physical and logical attacks.

While HSMs provide a secure foundation, they become vulnerable in the case of a bad actor gaining control over the device. To remedy this single point of failure, in comes Multi-Party Computation.  

Multi-Party Computation (MPC): A Revolution in Cryptographic Security

Multi-Party Computation (MPC) takes a different approach to security. Rather than safeguarding a private key in a single location, MPC splits the process of generating and using the private keys into multiple “shards” across multiple parties(instances). No single party possesses the entire key, thus ensuring that the complete key is never assembled in one place. Even with one part compromised, the key remains unusable without all shards.

Synergizing HSM and MPC for Ultimate Security

The combination of HSM and MPC technologies presents a powerful alliance for the protection of digital assets. While HSMs offer a secure and hardened environment for key storage and cryptographic operations, MPC provides a layer of distributed security that protects against the failure or compromise of any single point.

This synergy allows for the creation of secure and resilient custody solutions that benefit from the strengths of both technologies:

• The robust physical security and fast processing capabilities of HSMs,

• The distributed and flexible nature of MPC enhances privacy and reduces single points of failure.

Summary

Together, these technologies not only protect against current threats, but also provide a scalable and adaptable security framework to meet future challenges, and are therefore an integral part of digital asset custody.