Blockstream Unveils Bitcoin Custody Platform as Adam Back Champions Offline Security Approach
In partnership with Thales, Blockstream introduces a custody solution utilizing specialized hardware for signing transactions, while Adam Back promotes offline security measures to minimize cybersecurity threats.
Blockstream, the Bitcoin infrastructure firm led by renowned cryptographer Adam Back, has introduced a newly developed institutional custody solution for digital assets in collaboration with Thales, a French technology conglomerate. The launch comes as Back emphasizes the importance of adopting simpler, offline security frameworks to safeguard Bitcoin holdings from the growing threat of advanced cyberattacks.
Unveiled on Friday, the custody platform integrates hardware security modules (HSMs) manufactured by Thales with Blockstream's proprietary Secure Multi-Party Computation (Secure-MPC) technology. This combination enables financial institutions to approve and authorize transactions while ensuring that sensitive cryptographic signing operations remain entirely within specialized security hardware, the company stated.
Blockstream highlighted that its architectural approach differs from traditional MPC implementations, which may execute certain components of the transaction signing process outside of dedicated security hardware. The company emphasized that its system performs the complete signing protocol exclusively within the secure, protected environment provided by Thales' HSMs.
In an interview with Cointelegraph, Adam Back, who serves as Blockstream's co-founder and chief executive officer, explained that standard MPC protocols tend to be overly complicated and demand extensive communication exchanges between multiple devices, making them impractical for implementing truly offline cold storage solutions. Back is widely recognized as a pioneering figure in cryptography, having created the Hashcash system that served as a foundational element for Bitcoin's proof-of-work consensus mechanism.
"When people talk about MPC, they're talking about some very esoteric and complicated protocols that are hard to secure and are very interactive. So you can't really use them in a cold storage setting," Back said.
Adam Back makes the case for simpler Bitcoin custody
Highlighting the vulnerabilities inherent in internet-connected custody systems, Back referenced the recent Binance $6.3 billion hack as a cautionary example. He argued that maintaining signing devices in an offline state can serve as an effective measure to prevent unauthorized access and protect institutional assets.
The findings from Binance's internal investigation revealed that malicious actors successfully compromised devices belonging to company employees and subsequently acquired authentication credentials, which ultimately granted them access to the cryptocurrency exchange's wallet-signing infrastructure and systems.
If you connect equipment to the internet, even if it's via firewalls and so on, there is risk that you can get unauthorized access. You can get hackers into the network, get hackers with access to logins they shouldn't have and so on.
Back further expressed concern that artificial intelligence technologies could exacerbate current security challenges, particularly by enabling malicious actors to identify and exploit subtle vulnerabilities and weaknesses in complex MPC implementation code that might otherwise go undetected by human analysts.
"The AIs can help attackers find small implementation errors and things like that, which may not be obvious," he said.
When questioned about whether the wider custody industry would embrace similar offline security methodologies in the future, Back expressed optimism while emphasizing that institutional players need to "adapt to the environment" by transitioning their digital asset holdings into cold storage solutions, thereby minimizing their exposure and vulnerability to potential cyberattacks that may be enhanced or accelerated by artificial intelligence capabilities.
"Complexity is the enemy of security. And going back to basics is the answer, you know, just cold-store it," Back added.