What is Hardware Security Module (HSM)? Why is it so important?

Cybercriminals can be found everywhere, targeting and attacking every sensitive device, software or system they encounter. This requires individuals and companies to take next-level security measures, such as the use of cryptographic keys, to protect their IT assets.

However, the management of cryptographic keys, including generating, storing, and verifying them, is often a major obstacle in system security. The good news is that you can securely manage cryptographic keys using the Hardware Security Module (HSM).

What is Hardware Security Module (HSM)?

The HSM is a physical computing device that protects and manages cryptographic keys. It usually has at least one secure cryptographic processor and is usually available as a plugin card (SAM/SIM card) or as an external device that attaches directly to a computer or network server.

HSM is purpose-built to protect the life of cryptographic keys using tamper-proof hardware modules that are transparent and protect data through a variety of techniques, including encryption and decryption. They also serve as secure storage for cryptographic keys used for things like data encryption, Digital Rights Management (DRM), and document signing.

How do Hardware Security Modules work?

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HSM ensures data security by generating, securing, deploying, managing, storing, and processing cryptographic keys.

During provisioning, unique keys are generated, backed up, and encrypted for storage. The keys are then deployed by authorized personnel who install them into the HSM, allowing controlled access.

HSM provides management functions to monitor, control, and rotate cryptographic keys according to industry standards and organizational policies. For example, the latest HSMs ensure compliance by implementing the NIST recommendation to use RSA keys of at least 2048 bits.

Once the cryptographic keys are no longer in active use, the archiving process is activated, and if the keys are no longer needed, they are securely and permanently destroyed.

What is the Hardware Security Module used for?

The primary purpose of HSM is to secure cryptographic keys and provide essential services to protect identities, applications, and transactions. HSM supports a variety of connectivity options, including connecting to a network server or being used offline as a standalone device.

HSMs can be packaged as smartcards, PCI cards, separate devices, or a cloud service called HSM as a Service (HSMaaS). In banking, HSM is used in ATMs, EFTs and PoS systems, etc.

HSM protects many everyday services, including credit card data and PINs, medical devices, identity cards and passports, smart watches, and cryptocurrencies.

Types of Hardware Security Modules

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HSMs come in two main categories, each offering unique protections tailored to specific industries. Below are the different types of HSMs available.

1. General purpose HSM

General-purpose HSMs have a variety of encryption algorithms, including symmetric, asymmetric, and hash functions. These most popular HSMs are known for their exceptional performance in protecting sensitive data types, such as crypto wallets and public key infrastructure.

HSMs manage many cryptographic operations and are commonly used in PKI, SSL/TLS, and general sensitive data protection. As a result, general-purpose HSMs are often used to help meet common industry standards such as HIPAA security requirements and FIPS compliance.

All-in-one HSMs also support API connectivity using Java Cryptography Architecture (JCA), Java Cryptography Extension (JCE), Cryptography API Next Generation (CNG), Public-Key Cryptography Standard (PKCS) #11, and Microsoft Cryptographic Application Programming Interface (CAPI), allowing users to choose the framework that best suits their cryptographic operations.

2. HSM payments and transactions

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The Payments and Transactions HSM is specifically designed for the financial industry to protect sensitive payment information, such as credit card numbers. These HSMs support payment protocols, such as APACS, while maintaining many industry-specific standards, such as EMV and PCI HSM, to be compliant.

HSMs add an extra layer of protection to payment systems by securing sensitive data during transmission and storage. This has led financial institutions, including banks and payment processors, to accept it as an indispensable solution to ensure secure processing of payments and transactions.

Hardware Security Module Key Features

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The HSM serves as a key component to ensuring compliance with cybersecurity regulations, enhancing data security, and maintaining optimal service levels. Here are the key features of HSM that help achieve this.

1. Anti-counterfeiting

The main goal of making HSM tamper-proof is to protect your cryptographic keys in the event of a physical attack by the HSM.

According to FIPS 140-2, an HSM must include tamper-proof seals to qualify for certification as a Level 2 (or higher) device. Any HSM tampering attempt, such as removing ProtectServer PCIe 2 from its PCIe bus, will trigger a spoof event that deletes all encryption documents, configuration settings, and user data.

2. Safety Design

The HSMs are equipped with unique hardware that meets the requirements set forth by PCI DSS and complies with various government standards, including Common Criteria and FIPS 140-2.

The majority of HSMs are certified at various FIPS 140-2 Levels, primarily at Level 3. Selective HSMs are certified at Level 4, the top tier, which is a great solution for organizations looking for the highest level of protection.

3. Authentication and access control

HSMs act as gatekeepers, controlling access to the devices and the data they protect. This is evident in their ability to actively monitor their HSMs for tampering and respond effectively.

If tampering is detected, certain HSMs will deactivate or delete cryptographic keys to prevent unauthorized access. To further enhance security, HSM uses strong authentication methods such as multi-factor authentication and strict access control policies that restrict access to authorized individuals.

4. Compliance and audit

HSMs need to comply with various standards and regulations, including the European Union's General Data Protection Regulation (GDPR), Domain Name System Security Extensions (DNSSEC), PCI Data Security Standard, Common Criteria, and FIPS 140-2.

Compliance with standards and regulations ensures data and privacy protection, DNS infrastructure security, secure payment card transactions, internationally recognized security standards, and compliance with government encryption standards.

HSM also includes logging and auditing features, allowing for monitoring and tracking of encryption activities for compliance purposes.

5. Integrations and APIs

HSM supports popular APIs, such as CNG and PKCS #11, allowing developers to seamlessly integrate HSM functionality into their applications. They are also compatible with several other APIs, including JCA, JCE, and Microsoft CAPI.

Isabella Humphrey

Update 24 July 2023