Blockstream and Thales launch institutional custody as Back urges offline storage

Blockstream has launched an institutional digital asset custody solution built with French technology group Thales. The company announced it on Friday, while CEO Adam Back pushed for simpler offline security systems.

What Blockstream announced

The system pairs Thales hardware security modules (HSMs) with Blockstream's Secure Multi-Party Computation (Secure-MPC) technology. According to the company, institutions can authorize transactions while sensitive cryptographic operations stay inside dedicated hardware.

Adam Back is co-founder and CEO of Blockstream. His Hashcash system is seen as one of the foundations of Bitcoin's proof-of-work mechanism.

Where the signing happens

In conventional MPC implementations, part of the signing process may run outside protected hardware. Blockstream says its architecture runs the entire signing protocol inside the protected environment of Thales HSMs.

Separately, Back told Cointelegraph why he thinks typical MPC fits cold storage poorly. Such protocols are often complex and need too much communication between devices, so they cannot realistically run fully offline.

"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."

- Adam Back, co-founder and CEO of Blockstream, from an interview with Cointelegraph

Back's argument

Back believes AI will make existing security problems harder to manage. In his words, models help attackers find small implementation errors that are not obvious to developers. Complex MPC protocols give them more room to look.

Asked whether the industry would adopt similar offline models, he said he hopes so. Institutions, he argued, should "adapt to the environment" and move assets into cold storage.

"Complexity is the enemy of security. And going back to basics is the answer, you know, just cold-store it."

- Adam Back, co-founder and CEO of Blockstream, from an interview with Cointelegraph

The Binance example

As an example of the risks facing internet-connected infrastructure, Back pointed to the $6.3 billion hack of Binance. According to the exchange's own investigation, attackers compromised employee devices and obtained credentials to its wallet-signing infrastructure.

Blockstream earlier refused to pay a ransom to the Liquid hackers, who reportedly hold nearly 600 BTC. The new system targets institutional clients that hold Bitcoin and other digital assets. The announcement gives no launch date or pricing.