In-Depth Overview of Hardware Security Modules (HSMs)

Explore hardware security modules, types and applications!

In today’s interconnected world, the possibility of cyberattacks is inevitable. According to statistics, the number of zero-day attacks has increased by almost 200% since 2011. And this number is not decreasing in any way. Around 42% of all cyberattacks in 2021 were zero-day attacks. These attacks cost organizations a lot of money. Now, the main thing to understand here is that these financial losses can be reduced. How? By using hardware security modules!

As more than 43% of cyberattacks target SMBs, the loss of money is significant. Cybercrime loss is already accelerating to reach $10.5 trillion by 2025, which is a staggering number. Looking at the numbers, it’s easy to say that HSM security is imperative.

The term HSM may sound a bit unfamiliar to many of you. But, it has been used for security for over a decade. Here in this article, we will analyze the hardware security module down to its core. This article will unveil the definition, utility, applications and various other aspects of HSM.

Let’s start!

What are Hardware Security Modules?

It’s easy to understand if you offer customers the assurance of security. You should use state-of-the-art methods to protect your sensitive data. More importantly, it is necessary to keep your security systems intact.

HSM is one of those intact security systems used by 47% of businesses in 2021. We all know that organizations’ websites and devices use encryption to keep your data secure. But what if the hacker gets their hands on the cryptographic keys? It will be catastrophic from a numerical point of view.

HSM or Hardware Security Module is a physical device that securely houses cryptographic keys. These hardware components are tamper-proof and tamper-proof, making them ideal for storing keys. Additionally, the HSM hardware security module also enables encryption, decryption, authentication, and key exchange facilitation.

As a physical device, the hardware security module has a powerful operating system connected to restricted network access. This means that only authorized personnel can access its features.

The coolest part of an HSM system is that it allows employees to use keys without direct access. The software used by the web server handles all cryptographic functions without uploading a copy of the keys to the server. As servers can be vulnerable to cyberattacks like DDoS, you can rest assured that keys are stored securely.

How do hardware security modules work?

Well, the central aspect of an HSM is that it does not leak cryptographic keys. It manages all the security operations within its system and provides you with the desired result just like a vending machine.

A vending machine does not allow you to touch or tamper with its interior contents. But, when you provide an entry to the vending machine and pay for what you want, it dispenses the snack.

Similarly, if a user wishes to obtain a signed digital certificate, they can provide it to the HSM. The HSM system accepts the certificate, signs it with the cryptographic key in the isolated environment, and sends it back. The user receives the signed certificate without accessing the cryptographic key.

What are the different types of security hardware modules?

Now the basic functionality of the hardware security module is clear. Let’s look at the types of HSMs.

As the needs of each business are different, the HSMs required for them also change. For example, HSMs can be divided according to their use and form.

Usage-Based HSMs

As the usage of enterprises varies according to their size and niche, the HSMs they use are also different. HSMs can be categorized into two types based on their use!

  1. General purpose HSM: The General Purpose HSM uses the most common HSM encryption algorithms. It is useful for companies that deal in the basic form of security systems. This includes basic sensitive data, public key infrastructures, cryptocurrencies, etc.
  2. Payment hardware security module: As the name clearly suggests, the payment hardware security module is used by financial institutions. Primarily operated by the banking industry, the module is used to protect cryptographic keys and customer PINs. When customers use magnetic stripe and EVM cards to manage payments, the payment hardware security module manages transactions securely.

The payment hardware security module has many functions!

  • Sharing keys with third parties for secure transactions.
  • Generation, validation and management of the PIN code.
  • Ability to block PIN code when changing ATMs and POS.
  • Point-to-point encryption key management and secure data encryption.
  • Identifiers issued for payment cards.

Here is an overview of general purpose and payment hardware security modules!

Type General purpose HSM payment
Formats/types Dedicated hardware devices and physical appliances. Cloud-based access to a provider’s physical devices or virtual capabilities. Dedicated hardware devices and physical appliances.
Compliance Requirements and Standards FIPS 140-2 (level 3 or higher) Common Criteria (ISO/IEC 15408) EN 419 221-5 PCI HSM FIPS 140-2 (Level 3 or higher) ANSI ICO and specific security requirements of various regional vendors and payment card industry
API Support Specifications PKCS#11, CAPI/CNG, JCA/JCE Non-standardized APIs
Industries Government and Public Sector Cyber ​​Security Entertainment Services Banking and financial institutions

Form-Based HSMs

So far we know that HSMs are in physical form, but that’s not the end of the matter. As businesses evolve, HSMs must also change.

For example, if today you use an HSM in a small USB key or plug-in card, you may need it tomorrow. These devices can then be turned into large external drives and devices that can take up more space. With the size, the price of the hardware security module also increases.

Now, if you are one of those companies that don’t have enough budget, you don’t have to worry. If you cannot fully invest in a physical HSM, you can opt for a cloud-based HSM.

When using a cloud-based HSM, you have the following options!

  1. Pay to access appliance or device features from an HSM provider.
  2. Pay to access the virtual environment within a shared HSM.
  3. Lease a physical HSM device that is stored in your offsite data center.

By renting or using the HSM from a vendor, you can get the same services at a lower cost. Amazon Web Services, IBM, and Thales are among the leading vendors of hardware security modules.

Each type of HSM, physical or cloud, has its pros and cons. Therefore, when making a choice, keep all the necessary factors in mind and read the SLA (service level agreement).

So, based on the form, there are two types of HSMs, namely physical and cloud HSMs.

What are the main uses of security hardware modules?

As a stand-alone unit housing highly sensitive data, the HSM has countless purposes and applications. Here are some of the best!

Protection and generation of cryptographic keys

One of the primary functions of an HSM is to store, protect, and generate cryptographic keys. The keys are generated in the HSM with a real random number generator. The TRNG produces unique and unpredictable keys ideal for encryption. Additionally, these keys are securely stored and protected inside the HSM until destroyed.


Although an HSM is tamper-proof, both physically and logically, it can be captured. In the event of such an event, a possibility of data tampering may arise. Therefore, HSMs are designed to destroy everything in them to prevent any type of data compromise.

Increase server performance

It is normal for servers to be overloaded in an enterprise digital architecture. And if HSMs are present, they can be of great use. HSMs can offload cryptographic operations and support operations that slow down servers. Some of them are designed to act as web traffic accelerators when needed.

Prevent insecure checkouts

Although highly unlikely, HSMs are designed to prevent insecure checkouts. How? They store the keys in an encrypted form which prevents any sort of extraction as plain text.

Protects the keys necessary for your internal operations

Companies need cryptographic keys for internal processes such as development, testing, and production. Since these keys should only be accessible to certain people, the HSM enables access control functionality. However, direct access is not provided to any. It is recommended not to use the same HSM in multiple environments.

How do hardware security modules ensure data security?

We’ve been talking about cryptographic key security for a while. We know that an HSM protects keys against tampering. But how?

Here is the answer !

HSMs are kept independent of the server network to provide superior security. Thus, if the attacker needs to access the HSM, he must do so physically. Even if someone gets their hands on the HSM, they might not be successful. Hardware security modules are equipped with various protective measures such as voltage sensors, temperature sensors, and drill protection mechanisms. These mechanisms protect the data from unauthorized access. If in any way the cybercriminal tends to breach these barriers, the HSM will self-destruct to prevent data compromise.

Where and who uses hardware security modules?

With these widespread and critical applications, HSMs are used by various industries and businesses.

  • IoT device developers
  • Financial organizations like banks, credit card companies, etc.
  • Cloud service providers
  • Entertainment service providers like OTT platforms (protecting properties from digital watermarks)
  • Certification authorities
  • Blockchain and Cryptocurrency Operations and Management Organizations


The cybersecurity space is evolving and the number of cyberattacks is increasing day by day. In a world where businesses run solely on data, having a powerful HSM on the side is imperative. An HSM system, as designed, is your one-stop army for data protection. Be sure to safeguard your Internet communications and transactions with the best HSM encryption. We hope this article helps you with the same.

The post In-Depth Overview of Hardware Security Modules (HSM) appeared first on the blog.

*** This is a syndicated blog from the Blog Security Bloggers Network written by the blog. Read the original post at:

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