When it comes to secure custody solutions for digital assets, the golden era of hardware is on its way out.
On the surface, HSMs remain popular for institutional cryptographic key custody, blockchain or not — and cold wallets reign supreme in crypto-enthusiast culture on Twitter and Google alike.
But, prepare yourselves — hardware’s downfall is coming. Recent hardware wallet hacks, the movement of cryptography from hardware-defined to software-defined, and the overall trend of digital transformation are the first signs. (For more on this in-depth, check out our article here on HSMs, Multi-sig, and MPC).
Blockchain is radically changing the transaction-based industries. Protecting these crypto asset transactions, requires the protection of a private key that is a must have, in order to sign every transaction. It is interesting to note that regardless of the transaction type, whether its a cryptocurrency, a smart contract on a user’s identity, a voting transaction or the metadata of a supply chain package — all of these transactions rely on the very basic ability of the owner to securely sign the transaction with their private key.
Most exchanges — fiat or cryptocurrency — maintain an operational strategy that involves aggregation of funds from multiple consumers’ accounts into a single higher-level account. In the cryptocurrency space this is known as a ‘co-wallet’ strategy. By means of introduction, the co-wallet strategy assumes that an exchange doesn’t keep consumers’ money in a dedicated wallet per consumer, but rather in a wallet that includes funds of multiple consumers.
In a practical implementation, this means that consumers of an exchange don’t hold a key to a wallet but only online authentication means (e.g. a password and/or two-factor authentication) to an account’s…
(Editor’s note: The original title of this article cited 6 parameters, not 7. We added the seventh parameter due to user feedback. Found one we missed? Let us know after the jump.)
Multi-Sig and HSMs have become the default choices for businesses and institutions that want to protect cryptocurrencies and blockchain transactions. Both are known and well-documented but have many disadvantages, especially when compared to Multi-Party Computation (MPC). This blog post will compare specifically the Multi Sig feature to MPC, but before diving into the ‘unrightfully’ Chekhov’s Gun[i] teaser, it is worthwhile explaining how Multi Sig has evolved.
Looking at the various publications of this week, it is easy to see the increasing amount of enterprise blockchain initiatives that are moving on from the concept or POC phase onto final testing stages. If names such as IBM, Oracle, SAP, Walmart etc. are starting to realize the benefits of Blockchain, the revolution is indeed a successful one.
One might argue that there are better technological alternatives to blockchain for these enterprise organizations; for example, distributed databases, but the supply chain market is so fragmented and by essence, any shipment crosses at least 3 owners, that blockchain here indeed is…