What is an HSM? What are the benefits to using an HSM?

Today more than ever, organizations have a need for high level security of their data and the keys that protect that data. The lifecycle of cryptographic keys also requires a high degree of management, thus automation of key lifecycle management is ideal for the majority of companies. This is where Hardware Security Modules, or HSMs, come in. HSMs provide a dedicated, secure, tamper-resistant environment to protect cryptographic keys and data, and to automate the lifecycle of those same keys. But what is an HSM, and how does an HSM work?

What is an HSM?

A Hardware Security Module is a specialized, highly trusted physical device which performs all major cryptographic operations, including encryption, decryption, authentication, key management, key exchange, and more. HSMs are specialized security devices, with the sole objective of hiding and protecting cryptographic materials. They have a robust OS and restricted network access protected via a firewall. HSMs are also tamper-resistant and tamper-evident devices. One of the reasons HSMs are so secure is because they have strictly controlled access, and are virtually impossible to compromise.

For these reasons and more, HSMs are considered the Root of Trust in many organizations. The Root of Trust is a source in a cryptographic system that can be relied upon at all times. The strict security measures used within an HSM allow it to be the perfect Root of Trust in any organization’s security infrastructure. Hardware Security Modules can generate, rotate, and protect keys, and those keys generated by the HSM are always random. HSMs contain a piece of hardware that makes it possible for its computer to generate truly random keys, as opposed to a regular computer which cannot create a truly random key. HSMs are also generally kept off the organization’s computer network, to further defend against breach. This means an attacker would need physical access to the HSM to even view the protected data.

Types of HSMs

There are two main types of Hardware Security Module:

  1. General Purpose: General Purpose HSMs can utilize the most common encryption algorithms, such as PKCS#11, CAPI, CNG, and more, and are primarily used with Public Key Infrastructures, cryptowallets, and other basic sensitive data.
  2. Payment and Transaction: The other type of HSM is a payment and transaction HSM. These types of HSM are created with the protection of payment card information and other types of sensitive transaction information in mind. These types of Hardware Security Module are narrower in the types of organizations they can work within, but they are ideal to help comply with Payment Card Industry Data Security Standards (PCI DSS).


As HSMs are used so often for security, many standards and regulations have been put in place to ensure Hardware Security Modules are properly protecting sensitive data. The first of these regulations is the Federal Information Processing Standard (FIPS) 140-2. This a standard that validates the effectiveness of hardware performing cryptographic operations. FIPS 140-2 is a federal standard in both the USA and Canada, is recognized around the world in both the public and private sectors, and has 4 different levels of compliance.

  • Level 1, the lowest level, focuses on ensuring the device has basic security methods, such as one cryptographic algorithm, and it allows the use of a general purpose model with any operating system. The requirements for FIPS 140-2 level 1 are extremely limited, just enough to provide some amount of security for sensitive data.

  • Level 2 builds off of level 1 by also requiring a tamper-evident device, role-based authentication, and an operating system that is Common Criteria EAL2 approved.

  • Level 3 requires everything that level 2 does along with tamper-resistance, tamper-response, and identity-based authentication. Private keys can only be imported or exported in their encrypted form, and a logical separation of interfaces where critical security parameters leave and enter the system. FIPS 140-2 level 3 is the most commonly sought compliance level, as it ensures the strength of the device, while not being as restrictive as FIPS 140-2 level 4.

  • Level 4 is the most restrictive FIPS level, advanced intrusion protection hardware and is designed for products operating in physically unprotected environments. Another standard used to test the security of HSMs is Common Criteria (ISO/IEC 15408). Common Criteria is a certification standard for IT products and system security. It is recognized all around the world, and come in 7 levels. Like FIPS 140-2, level 1 is the lowest level, and level 7 is the highest level.

The final standard is the Payment Card Industry PTS HSM Security Requirements. This is a more in-depth standard, focusing on the management, shipment, creation, usage, and destruction of HSMs used with sensitive financial data and transactions.

Advantages to HSMs

Hardware Security Modules have a number of benefits including:

  • Meeting security standards and regulations
  • High levels of trust and authentication
  • Tamper-resistant, tamper-evident, and tamper-proof systems to provide extremely secure physical systems
  • Providing the highest level of security for sensitive data and cryptographic keys on the market
  • Quick and efficient automated lifecycle tasks for cryptographic keys
  • Storage of cryptokeys in one place, as opposed to several different locations