Cryptoasset Custodial System Using Distributed Encrypted Client Keys
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Solution Overview
Problem
Current blockchain-based cryptoasset systems lack secure and accessible solutions for managing access to large quantities of cryptocurrencies, as they often rely on hardware wallets that limit access to a single owner, making it difficult for multiple users to access or manage cryptoassets securely.
Innovation Solution
A cryptoasset custodial system using encrypted and distributed client keys, where a hardware security module generates a client key, encrypts it, and distributes it to multiple client devices, requiring a quorum of user endorsements for transaction authorization, ensuring both security and redundancy.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If hardware wallets are used to store cryptocurrency, then security is improved, but accessibility for multiple users deteriorates
Solution Approach 1:
The system segments the cryptographic key management by separating the encrypted client key storage (distributed to multiple client devices) from the decryption capability (retained in the hardware security module). This segmentation allows multiple users to access cryptoassets securely without compromising the security model, as each user can have access to encrypted keys while the master key remains protected in the HSM.
2Ease of operation
If access keys are distributed to multiple users, then accessibility is improved, but security deteriorates
Solution Approach 1:
The hardware security module acts as an intermediary that mediates between the distributed encrypted client keys and the cryptoassets on the blockchain. The HSM holds the cryptographic key material needed to decrypt client keys and sign transactions, but never exposes the actual private keys to users or networks. This intermediary role enables multi-user accessibility while maintaining security, as the HSM controls and verifies all cryptographic operations.
3Reliability
If encrypted client keys are stored on client devices, then redundancy is improved, but security risk increases
Solution Approach 1:
The system applies local quality by storing different forms of cryptographic material in different locations with different security properties. Encrypted client keys are stored locally on client devices for redundancy and accessibility, while the decryption capability and master key material remain in the secure hardware security module. This local differentiation allows the system to optimize for both redundancy and security in appropriate locations.
Data Source
AI summary
A hardware security module (HSM) generates a client key for an account holder of a cryptoasset custodial system. The HSM encrypts the client key to generate an encrypted client key using a hardware-based cryptographic key within a secure storage device. The encrypted client key is transmitted to client devices. The HSM deletes the encrypted client key from the secure storage device. Each client device stores the encrypted client key in an offline secure enclave. A request to authorize a cryptoasset transaction is received. The HSM determines that signed messages endorsing the cryptoasset transaction have been received from at least some client devices in satisfaction of a quorum. The encrypted client key is received from at least one client device. The HSM decrypts the encrypted client key. The HSM signs an approval message for the cryptoasset transaction using a cryptoasset key based at least in part on the client key.