The Hardware Security Module Guide: Use Cases & Alternatives

Key Takeaways

• Hardware Security Modules (HSMs) are physical devices used to protect an organization's cryptographic keys.
• HSMs are commonly used in finance, healthcare, government, and other industries that require strict security practices.
• Benefits include tamper resistance, key isolation, compliance, audit-readiness, and Zero Trust alignment, with cost, latency, and complexity as the top disadvantages.
• Anjuna Seaglass provides the strongest alternative to HSMs, offering Trusted Execution Environments (TEEs) that keep data, workloads and applications secure during use without sacrificing flexibility.

With evolving cyberthreats and increasing regulations, organizations that handle sensitive data need effective security solutions to manage cryptographic keys. For decades, HSMs have been the best way to store these keys, keeping them protected within a physical device that cannot be breached remotely.

But HSMs were not designed for modern infrastructure. They speak their own APIs, making re-coding necessary when switching providers. They add latency to every cryptographic call, and scaling them across regions or infrastructure providers is expensive and slow.

So what can organizations do to attain that level of security while also retain the agility modern infrastructure demands? In this post, we explore that and more, covering what HSMs are, when they're best used, and pros and cons of using them. Plus, we'll discuss the best alternatives to HSMs.

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What Is a Hardware Security Module?

A HSM is a physical, tamper-resistant device that is designed to keep cryptographic keys secure while still enabling them to be used. HSMs are used by organizations that need the highest level of security, including banking, healthcare, and government.

Instead of storing encryption keys in software where they can potentially be extracted by hackers or insider threats, an HSM keeps them locked inside a physical device. Users can utilize the organization's keys within the HSM to encrypt, decrypt, or authenticate, but the actual key is never exposed outside of the device in plaintext. Even if the host OS is fully compromised, keys remain inside the HSM. If the device is physically breached, the HSM can zeroize the keys, making them unusable to the hacker.

Hardware Security Module Use Cases

With the increase in speed and scale of cybercrime, organizations must invest in cybersecurity solutions or risk major losses. For businesses in highly regulated industries, that risk is even higher. HSMs provide organizations the highest level of security for cryptographic keys. Here are some of the most common ways they're used today:

• Payments: Payment HSMs are the most common type in use today. The Payment Card Industry (PCI) Personal Identification Number (PIN) Security Requirements, enforced alongside PCI Data Security Standard (DSS), require HSMs used for PIN processing to be certified to the PCI PIN Transaction Security (PTS) HSM standard. Payment networks use HSMs to protect PIN processing, card validation, transaction signing, and all cardholder data.
• Healthcare: Healthcare providers must comply with Health Insurance Portability and Accountability Act (HIPAA) regulations or face steep penalties. HSMs are used to safeguard electronic Protected Health Information (ePHI), process patient data, and safely manage prescriptions.
• Government: Government organizations handle vast amounts of critical data. HSMs can be used to keep digital identity infrastructure secure, including electronic voting systems, e-passports, and national identity systems. Defense and national security operations use HSMs to keep top-secret data safe from hackers.
• Technology and IoT: The Internet of Things (IoT) connects physical devices like fridges, thermostats, doorbells, and more to the internet, but weak protections make them vulnerable to hackers. Organizations relying on IoT devices use HSMs to secure the network and protect vulnerable endpoints.
• Secret management: Organizations use HSMs to protect their most valuable secrets, including proprietary source code, trade secrets, intellectual property, internal signing keys, and confidential documents.
• Transport Layer Security (TLS)/ Secure Sockets Layer (SSL) termination: When a web server needs to terminate Hypertext Transfer Protocol Secure (HTTPS) connections, the server's private key has to be available. Storing that key in an HSM means even if the server is compromised, the key stays secure inside tamper-resistant hardware.
• Code signing: Software releases, firmware updates, and mobile app builds all need cryptographic signatures. The signing key is a single point of failure. Lose it, and you can't prove authenticity anymore. HSMs keep the key locked down while still enabling its use.
• Database encryption: Master keys for Transparent Data Encryption (TDE) or column-level encryption live in an HSM. The database can request encryption operations, but the master key never goes beyond the hardware.

Pros and Cons of HSMs

HSMs are used in organizations around the globe to safeguard cryptographic keys. They are inaccessible remotely, and should someone attempt unauthorized access, they provide varying levels of resistance. Organizations in need of protecting critical secrets trust HSMs for their many benefits, including:

• Tamper-resistant: HSMs are housed within tamper-resistant casing. If an unauthorized person tries to open the device, the keys can be destroyed so hackers cannot use them.
• Key isolation: Cryptographic keys never leave the HSM in plaintext form. Even a full compromise of the host OS or application doesn't expose the keys.
• Compliance: HSMs help organizations comply with regulations like HIPAA and PCI DSS.
• Audit-readiness: HSMs produce tamper-evident audit logs, making them a natural fit for highly regulated industries.
• Strong encryption keys: HSMs generate keys using a hardware-based True Random Number Generator (TRNG). These cryptographic keys are stronger and harder to predict or brute-force.
• Zero Trust alignment: HSMs are a natural fit for a Zero Trust architecture. Every signing, decryption, or key derivation request must be explicitly authenticated and authorized, while keys are never exposed.

While HSMs offer many benefits, there are some drawbacks to consider, including:

• Cost: Physical HSMs require a significant capital expenditure and are expensive to maintain.
• Latency: Every cryptographic operation must be routed through the HSM, which adds time to each request. At scale, this latency adds up.
• Vendor lock-in: HSMs use different APIs, such as Public-Key Cryptography Standard (PKCS)#11, Microsoft Cryptography API: Next Generation (CNG), and (Conversions Application Programming Interface (CAPI). They're not interchangeable, which locks you into one vendor or requires applications to be re-coded in order to switch.
• Scaling friction: Scaling up is difficult, resource intensive and costly.
• Slow to update: HSMs can be slow to update, making it difficult to keep up with modern requirements.
• Complexity: HSMs are complex to deploy and operate, which tends to impact smaller organizations without robust IT resources.

Top Alternatives to HSMs

Traditional HSMs are effective, but for modern organizations, they may feel too rigid, complex, or expensive. These are the top alternatives to HSMs worth considering:

1. Anjuna Seaglass

Anjuna Seaglass uses hardware-assisted Trusted Execution Environments (TEEs) — built on chipsets like Intel SGX and AMD SEV-SNP — to provide HSM-level key isolation without the hardware overhead. Applications run inside Anjuna Confidential Containers, where cryptographic keys are generated, stored, and used. There's no re-coding and no network round trip for every signing operation. The key never touches unsecured memory or disk, and policy-based cryptographic attestation through the Anjuna Policy Manager provides tamper evidence comparable to an HSM's physical zeroization.

With Anjuna, you can run entire workloads within a secure enclave, protected in all data states: at-rest, in-transit, and in-use. Anjuna works across AWS, Azure, and Google Cloud, plus on-premises and Kubernetes environments, so you're never locked into a single cloud vendor. Deployment takes a single command, and customers have reported significantly faster time-to-deployment along with measurable reductions in security spend. You get hardware-level protection with the agility modern organizations need. Anjuna Seaglass is one part of Anjuna's broader confidential computing portfolio, which also includes Anjuna Northstar for confidential multi-party data collaboration and Anjuna Overwatch for agentic AI governance.

Benefits of Anjuna include:

• Always-on encryption in-use, at-rest, and in-transit
• Works across multi-cloud environments and on-premises systems, including Kubernetes
• No code changes required; existing applications run unmodified inside Anjuna Confidential Containers
• Policy-based cryptographic attestation, so secrets are only released to verified, trusted workloads
• Simplified deployment with a single command
• Confidential multi-party data collaboration without revealing underlying secrets

2. Confidential Computing from Cloud Service Providers

Instead of putting keys in a separate hardware appliance, confidential computing creates a hardware-isolated execution environment inside the CPU itself. Code and data inside are encrypted in memory and invisible to the host OS, hypervisor, and cloud provider. Where HSMs protect the cryptographic keys, confidential computing protects the entire computation including the key while it's being used.

Examples include AWS Nitro Enclaves, Azure Confidential Computing, and processor-level technologies such as Intel SGX/TDX and AMD SEV-SNP.

3. Cloud HSM Services

HSMaaS (HSM as a Service) gives you the same hardware-level protection as an on-premise HSM without the upfront costs and maintenance. The underlying hardware is a traditional HSM, just hosted in your provider's data center. This saves you money and maintenance costs, but you still pay per operation and still deal with vendor-specific APIs and latency. Even so, this option enables smaller organizations to access hardware-level protection without the cost.

Examples include AWS CloudHSM, Azure Dedicated HSM, and Google Cloud HSM.

4. Software-Based Key Management

Rather than using a physical device, software-based key management stores and manages cryptographic keys in software, often backed by an HSM or a secure enclave. The day-to-day key operations happen in application memory or through a service API. The biggest advantages are simplicity and the velocity of deployment. The trade-off, however, is that keys are more exposed during use. Even if the root key lives in an HSM, derived keys or decrypted data may exist briefly in system memory, putting them at a slight risk.

Examples include IBM’s HashiCorp Vault, AWS KMS, and Azure Key Vault.

Conclusion

HSMs have been the best way to protect cryptographic keys for decades. They provide physical tamper resistance and the kind of auditability that compliance frameworks demand. But modern business has moved to the cloud, and traditional HSMs struggle to keep up.

That's where Anjuna comes in. Our confidential computing platform provides hardware-level protection for sensitive data, cryptographic keys, and source code combined with the flexibility of the cloud. Unlike HSMs, Anjuna works across multiple cloud vendors and on-premises infrastructure, requires no re-coding, and deploys in a single command.

If you're ready to upgrade your cryptographic security, Anjuna has you covered. Contact us today to talk with one of our experts.

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FAQs

What are the main problems with hardware security modules?

HSMs are expensive and require significant maintenance and specialized knowledge to deploy. They use vendor-specific APIs, which can lock you into one vendor, and they add latency to cryptographic operations.

How do hardware security modules work?

Applications send commands such as “decrypt this” or “derive a new key” to the HSM over a network or local bus. The HSM performs the operation inside the hardware boundary using the stored key and returns the result without ever exposing the key.

What is the difference between an HSM and TPM?

Both HSMs and TPMs (Trusted Platform Modules) store cryptographic keys in dedicated hardware, but they serve very different purposes. A TPM is a low-cost chip soldered onto a motherboard. Its job is to secure a single device. An HSM is a standalone device designed for enterprise-scale cryptographic operations.

What happens if the HSM detects tampering?

HSMs are built with multiple tamper sensors: switches on the casing, mesh layers inside the enclosure, temperature sensors, and sometimes voltage or radiation sensors. If any of those are triggered by unauthorized access, the HSM instantly purges all sensitive material stored inside, and the device becomes inoperable until it's reinitialized.

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