The Estonian cryptography startup that wants to be the Qualcomm of data security

Guardtime's tech uses hash function cryptography to protect data integrity, and its products are finding a foothold in the US and China.
Written by Kalev Aasmae, Contributor

"What Qualcomm is to mobile technology we hope to be for electronic data," says Mike Gault, chief executive of Guardtime.

Guardtime's digital signature technology, designed to prevent electronic data being tampered with, was produced by Estonian computer scientists led by Ahto Buldas.

While the company was set up by a team of Estonian cryptographers, network architects, software developers and security professionals seven years ago, the origins of its technology development go back decades.

Buldas heavily contributed to the development of Estonia's Digital Signature Act and ID card in the late 1990s, which created the world's first national level public key infrastructure (PKI). This, among other initiatives, allowed the country's population to sign documents digitally and saw Estonia become first country in the world to implement electronic voting for parliamentary elections in 2007.

After the PKI in Estonia was put to use, Buldas used his experience of developing and implementing the system to invent a new cryptographic tagging system, named Keyless Signature Infrastructure (KSI).

The system, aims to ensure the integrity of electronic data by allowing it to be independently verified using only mathematical methods, without the need for human administrators.

Under Guardtime's system, based on hash function cryptography, data can be signed electronically, with the signature later used to show who signed, at what time, and whether any changes have been made since the data was signed.

Buldas co-founded Guardtime in 2006 to develop the technology, and sell it to organisations and governments worldwide.

Although the company had signed some internationally significant deals before this year, including one with China Telecom, the largest fixed line operator in the country, this year has seen Guardtime building up momentum abroad.

In April, China's Zhejiang province started to use KSI in its government services, while just a little before that, Guardtime announced a partnership with the Philippines government to validate physical document integrity. But the biggest news was announced in the beginning of August — Guardtime signed a licensing agreement with US military technology company MTSI to deliver KSI to the US defense and intelligence communities.

According to Gault, this means that engineers from MTSI will come to Estonia for training and certification on KSI technology. After that they will be certified to train the different departments in the US federal government.

"We can't tell how the technology will be deployed as won’t even know ourselves due to the classified nature," he says.

The most important markets right now for Guardtime are USA and China, and Gault sees the latter especially as a promising market in the near future.

"We are talking to the government of every single province in China as well as the central government in Beijing. In China there is a very low level of trust between people and our technology helps remove the need for trust in humans. Whether it is pollution sensors in Beijing or banking statements in Hubei the ability to have proof independent of human beings is an incredibly valuable thing to have."

Guardtime's revenue is set to grow about tenfold this year, according to the CEO, who says he expects the trend to continue into next year, with sales reaching $50m in 2014.

In recent years Guardtime has grown globally and has offices in Palo Alto, Bejing, Singapore and Tokyo, but like many other successful Estonian startups, the original research and development team is still located in Estonia, being just a stone's throw away from Skype's main engineering office.

Gault says that although the company has now got a big global reach, it is still hard to imagine a more Estonian company.

"The technology was invented by Estonian scientists, the company founded by Estonians and the majority of employees are Estonian. Our goal is to build a global brand and technology standard that everyone in Estonia can be proud of."

The local market remains valuable for Guardtime, enabling it to get case studies for the rest of the world. Last year the company signed a deal with Estonian minister of economic affairs and communications Juhan Parts to provide company's services free to the Estonian public sector.

"It is a win-win situation as we get early feedback on how our technology can be deployed and get great case studies from the most respected e-government in the world. Over 300 delegations visit Estonia every year to learn how things are done. What a great opportunity for a company that wants to export its technology to foreign governments," he says.

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