Blockstream has launched an institutional custody solution that executes Bitcoin transaction signing entirely within Thales' hardware security modules, eliminating the network exposure of conventional MPC setups.
The architecture combines Thales' HSMs with Blockstream's Secure-MPC protocol. Unlike standard implementations that perform portions of signing outside dedicated hardware, this system keeps cryptographic operations confined to the physical device.
Blockstream co-founder Adam Back has been vocal about the security failures of complex, internet-connected custody infrastructure. He cited the $6.3 billion Binance hack—where attackers compromised employee devices to access wallet-signing systems—as evidence that conventional approaches create unacceptable risk vectors.
Back argued that most MPC protocols are over-engineered and difficult to audit. In a Cointelegraph interview, he said the protocols' complexity and interactivity make them impractical for true cold storage and create implementation gaps where adversaries can operate.
He also flagged AI as an accelerating threat. Sophisticated attackers leveraging machine learning could discover subtle flaws in complex MPC code that manual review misses, Back said.
Blockstream's offline model reduces that surface. By keeping signing operations air-gapped and in dedicated security hardware, the system removes network-based attack pathways entirely. Back expressed confidence that institutions will migrate toward similar cold storage models as the threat landscape intensifies.
