Blockstream, a longstanding Bitcoin infrastructure firm led by Adam Back, has introduced a new enterprise custody solution in collaboration with Thales, a French cybersecurity group. Announced on November 13, the system aims to enhance security by keeping the most sensitive part of Bitcoin transactions, signing keys, locked inside dedicated hardware security modules (HSMs). This approach is designed to protect against the types of AI-era attacks that have become increasingly sophisticated.
The solution integrates Thales' HSMs with Blockstream's Secure Multi-Party Computation (Secure-MPC), which distributes signing authority across multiple parties without exposing the private key. The key innovation is that the entire signing process occurs within the secure environment of the HSM, reducing exposure to potential attacks. The system also employs FROST, a threshold signing protocol that allows multiple authorized parties to jointly produce a signature without reconstructing the full private key.
The launch follows a massive $6.3 billion hack on Binance, attributed to North Korea, which exploited vulnerabilities in connected computers and AI tools. The attack highlighted the risks of software-based custody solutions, making hardware-based alternatives more appealing. Blockstream's system is designed to prevent such breaches by ensuring that signing keys never leave sealed devices, rendering hacked laptops far less useful.
Adam Back, a pioneer in cryptography and co-founder of Blockstream, has long advocated for offline key storage. The broader industry is also moving toward hardware-based solutions, with Thales expanding its work with Fireblocks to keep signing operations within customer-owned HSMs. This shift is driven by the need to reduce exposure points for keys as AI makes it easier for attackers to exploit software vulnerabilities.
For institutions, security remains a critical barrier to widespread Bitcoin adoption. The new custody solution aims to meet the stringent standards required by banks and asset managers, facilitating the integration of Bitcoin into their operations. This is particularly relevant as spot Bitcoin ETFs have gained traction since their 2024 launch, drawing more institutional interest. Despite recent price volatility, with Bitcoin trading below $70,000, the infrastructure supporting the asset continues to strengthen.