As blockchain security practitioners, we have always paid great attention to how to ensure the absolute security of the private keys of hot and cold wallets.
A hardware security module (HSM) is a traditional security solution for managing digital keys, and it has been widely used in PKI environments and financial fields.
For now, using HSM technology may be the perfect solution based on blockchain. HSMs generate key pairs, store them securely, and can offload cryptographic operations from the entire system.
In this article, I will try to talk about HSM technology from real use cases, market product analysis, code samples and future predictions.
What are HSMs?
An HSM is a physical device or cloud service that secures and manages digital keys -- facilitating encryption, decryption, signing and verification.
The role of the HSM is to provide a secure environment for interacting with private keys. Without this environment, keys are at risk of being exposed. Traditionally, these modules have come in the form of plug-ins or external devices that connect directly to a computer or network server.
HSM is a cryptographic device responsible for managing the entire lifecycle of private keys. This life cycle includes generation, distribution, rotation, storage, destruction and archiving. It is specifically designed and built to create a tamper-resistant secure environment for fast and secure cryptographic operations without affecting the keys it contains.
How are they used today?
Today, HSM devices are primarily used by the retail banking industry to provide a high level of protection for encryption keys and customer PINs used during the issuance of magnetic stripe and EMV chip cards – and subsequently to process payment transactions for credit and debit cards.
The focus is usually on the private keys of hot wallets, since they have online real-time interactions. Exposure of private keys could be the end of the world for blockchain projects. When someone in danger gains access to your private keys, it's usually game over. This could be professional hackers, script kiddies, or even insiders who might misuse the organization's funds.
In these cases, HSMs can be a great security alliance for private key management - a top priority for everyone in the blockchain community.
HSMs are built on purpose-built hardware and feature a security-focused operating system. It has restricted, monitored access channels and implements a role separation mechanism for device operation and management. The main supported cryptographic operations are true random number generation (TRNG), symmetric and asymmetric key generation, hash function computation, encryption and decryption, and signature and signature verification. HSMs generate key pairs, have secure storage, and can offload cryptographic operations from the entire system.
How does HSM protect the blockchain wallet?
The address of an account in the blockchain is usually derived from the calculation of the public key. This public key has a corresponding private key, and the key pair applies the rules specified by the blockchain, such as length and encoding scheme. The generation of such a key pair should consider several basic aspects, such as true random source, generation algorithm and environment, distribution process, etc.
Blockchain solutions typically store private keys for hot wallets in databases, in local files, often encrypted but sometimes as plaintext, or even in plaintext in public Github repositories - a very bad idea.
In this architecture, security breaches or developer misuse can lead to exposure of private keys.
How can HSMs be used to improve blockchain security?
HSM devices can be used in blockchains in a number of ways, utilizing this established hardware technology to secure keys. After all, this fledgling industry needs more and better solutions to secure currency and reduce the risk of theft, hacking or security breaches.
Below, I outline six potential uses of HSM hardware to facilitate blockchain security:
Generate private and public key pairs: The HSM needs to support blockchain-specific elliptic curves, the Bitcoin and Ethereum blockchains use Secp256k1 elliptic curves, and Stellar uses Ed25519.
Secure Storage of Private Keys: Basic but important to remember.
Your private key must be kept safe and private - just like you keep your credit card's PIN. Failure to do so could lead to disastrous results. Your private key unlocks access to your private key. From accessing your funds or the identity of your employees. Protecting your private keys is equivalent to protecting your fingerprints when using biometric credentials.
Sign and verify transactions: by signing valid transactions to the blockchain, and verifying transactions when needed. This is a common use case for HSMs in banking, where people connect their devices to their accounts to approve transactions.
Hierarchical deterministic wallet support: Ability to derive key pairs in a secure environment from a single key master according to BIP32.
Encrypt, decrypt, and use key records in key databases: Solutions that maintain large numbers of keys require the use of key databases to store these keys. The HSM can receive the encryption key and use it to use it in a secure environment.
summary
summary
There are many security loopholes in the blockchain field. With the development of the industry, there are more and more demands for better and safer blockchain interactions. Security will remain at the top of the agenda, moving from secure encryption to sharing confidential corporate data.
Banks and other financial institutions have been grappling with these types of challenges for decades, and it is imperative that the blockchain community adopt tried and tested solutions, such as HSMs, that may be critical in helping blockchains grow and mature.
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