There’s a big difference between running a key management software application on your computer, and integrating a key management server with your IT infrastructure. With a hardware-backed solution like an HSM or key management server, dedicated components on the circuit board perform encryption functions, taking the processing load away from the CPU. Encryption keys are also stored within dedicated hardware components. All of these components are protected by a physically secure, tamper-resistant boundary.
On the other hand, software-based key management is implemented through software applications running on the host’s CPU. The software application uses the CPU to execute encryption algorithms. With software, encryption keys are stored in the computer’s memory or storage device, posing a major security risk (among others).
