Tech Dive-in: Unveiling the Multi Layer Security Pyramid from HBC
In finance, custody involves managing and protecting clients’ assets, ensuring investment security, mediating transactions, and handling accurate tax reporting. In the digital asset realm, custody methods vary, from individual to collaborative or professional third-party services. Choosing a cryptocurrency custody solution requires understanding their workings, benefits, risks, and tradeoffs.
Unlike traditional wallets storing cash, crypto wallets don’t hold cryptocurrencies; they reside permanently on the blockchain. Crypto wallets, including custodial wallets, store private keys — a cryptographic alphanumeric code functioning like a password. Public keys, like a bank account number, can be shared, while private keys, similar to PINs, grant access to funds and must be kept private. Private keys digitally sign transactions, proving ownership without revealing the keys. The security of private keys determines custody, and securing them ensures crypto safety.
In exploring different types of crypto custody, secure multiparty computation (MPC) stands out. MPC distributes the private key function among separate parties, enabling the execution of functions requiring collective inputs without disclosing individual inputs. Parties contribute to computations, learning only the output while keeping individual inputs concealed. Unlike multisig, MPC operates off-chain, maintaining the privacy of partial custody details from other blockchain users. It’s like baking a cake with secret ingredients — MPC acts as a magic box revealing only the combined result.
Key Players in Crypto Custody
Crypto custodians are third-party providers that hold and safeguard digital assets on behalf of investors, institutions, and other corporate entities.
By using a custodian, investors can avoid the technical side of storing crypto while rest assured that their digital assets are safe.
Let’s explore some of the best:
HyperBC stands as a market leader in digital asset custody and payment solutions, catering to businesses seeking a secure and efficient transition to Web3 transformation. This platform’s support for over 54 chains and 1200 tokens.
Coinbase Custody, established in 2012 and located in San Francisco, operates as a leading bitcoin exchange in the U.S. They offer military-grade cold wallets, undergo frequent audits, provide staking options, and introduced Coinbase Prime for institutional customers in 2023.
Ledger Enterprise is recognized for its crypto hardware wallet, featuring a multi-level security architecture, offline storage, and integrations with third-party service providers, including exchanges, market makers, and DeFi platforms.
BitGo, established in 2013, manages over 700 digital currencies and tokens. As a certified custodian, it employs cold storage systems and undergoes regular third-party audits. The platform boasts insurance coverage of a quarter of a billion dollars.
Bakkt, launched in 2018, provides cryptocurrency trading, on-ramp services, and institutional-grade custody. In 2023, they expanded their token support to eight, including Bitcoin, Ethereum, Litecoin, Dogecoin, and Shiba Inu. Their insurance coverage stands at $125 million.
Gemini Custody, based in New York, offers custodial crypto services with a focus on military-grade encryption and private key protection in dispersed locations, including former nuclear bunkers. While supporting tokens like Bitcoin, Ether, Litecoin, Zcash, and Bitcoin Cash, their insurance coverage is $75 million.
Review the HBC security architecture
Let’s delve into the operational procedures of HyperBC, a prominent crypto custodian.
Firstly, regulatory compliance is a cornerstone, and HyperBC holds various licenses such as MSB, Virtual Asset Service Provider, spanning eight countries from Australia to the United States.
Another crucial aspect is certification, where HyperBC proudly possesses ISO Certification from Callids Global, encompassing secure MPC Wallet as a Service for enterprise and asset custody, virtual and physical cryptocurrency card provision, secure API cryptocurrency payment gateway solutions, and physical cryptocurrency POS & ATM Kiosk provision.
Risk assessment plays a pivotal role, ensuring the security of transactions through identity verification, permission authentication, an approval process, a trusted execution environment, MPC signature authentication, and on-chain processing. No asset transfers occur without approval from designated parties, determined by predefined team roles and rules.
AML & KYT mechanisms at HyperBC involve advanced machine learning technology for distinguishing between various types of addresses and labeling them based on merchant requirements. This automated process aids in identifying suspicious transactions, providing notifications to merchants for high-risk transactions. HyperBC adopts a non-blocking approach, allowing merchants to decide whether to reject or approve flagged transactions.
MPC infrastructure | What is it and why’s it’s good
HBC MPC Infrastructure, a cross-platform, multi-cloud SaaS solution operating in a trusted environment with the MPC-CPM protocol, eliminates the risk of single-point failure, safeguarding digital assets from potential cyber-attacks, internal collusion, and human error.
This innovative solution provides users with flexible and convenient access to manage crypto assets from anywhere with an internet connection. It seamlessly integrates into various applications and platforms, empowering developers to add wallet functionalities without starting from scratch. With adaptability for both small businesses and large enterprises, it requires minimal adjustments. The robust security measures, including encryption and multi-factor authentication, prioritize the safety of users’ funds.
Additionally, leveraging existing infrastructure ensures cost efficiency in developing and maintaining a secure crypto wallet infrastructure. HyperBC’s solution simplifies technical requirements, making cryptocurrency management accessible to a wider audience without the need for in-depth technical understanding.
To sum up, Hyper BC offers the flexibility to provide solutions include cold wallets, warm wallets, and hot wallets tailored to customer requirements. Additionally, it enables enterprises to effectively manage virtual assets through diverse modes including custody, co-custody, and self-custody, all underpinned by the advanced MPC technology.
Use Cases of HyperBC Services
Our esteemed client, the cryptocurrency exchange CoinW, sought our expertise for the development of a high-quality API Co-Signer Application. Let’s walk through the operational scenario:
- CoinW initiates transaction requests through the HyperBC API business gateway.
- Upon receiving the transaction request, the internal system invokes the HyperBC API MPC gateway.
- Following the configured policy approval process, approval tasks are assigned to the API Co-Signer, who utilizes the API Co-Signer for approval.
- The API Co-Signer then triggers requests to the customer’s risk control system, clearing and settlement system, and business approval system for the audit and authorization of transaction tasks.
- Subsequently, the API Co-Signer obtains the approval authorization results.
- Once approval authorization is secured, the API Co-Signer actively participates in MPC computation.
A more detailed diagram illustrating this process is provided below.
We are pleased to share feedback directly from CoinW:
“We are a licensed crypto exchange, and the integration with HyperBC has significantly enhanced our ability to offer users a secure and regulated environment for storing digital assets. Collaboration between custodians and exchanges is crucial for addressing primary risks, especially exchange counterparty risk. HyperBC’s seamless dashboard and user-friendly interface have greatly improved our operational efficiency. Additionally, the platform’s support for over 54 chains and 1200 tokens aligns perfectly with our diverse requirements. We appreciate HyperBC’s commitment to setting the standard for client asset protection through their MPC custody architecture.”
Interested in delving deeper into HBC technologies? Explore how MPC WaaS integration can take place in your project.
