Multi-party computation (MPC) is a type of cryptographic protocol that allows multiple parties to simultaneously compute a function over an input without revealing the input.
MPC can be useful when parties want to calculate several functions simultaneously but want to keep private input from others. For example, a group of banks may want to determine the total amount of money in a joint account without revealing the account balance.
In MPC, each party has a secret input that is kept to itself. The process is carried out by carefully encrypting the input and performing computations on the encrypted value so that the final result is the desired function, everything remains secure.
The MPC protocol usually involves multiple rounds of communication between parties exchanging encrypted messages and performing various computations on their own inputs.
MPC is a complex and technical topic, and there are many variations and approaches to implementing the MPC protocol. Some of the main challenges in designing the MPC protocol include ensuring that the protocol is secure from various attacks, such as malicious parties trying to learn the other party’s input, and ensuring that the protocol is efficient in terms of computing resources and communication costs.
What is a multi-party computing crypto wallet?
A multi-party computing crypto wallet is a crypto wallet that uses MPC technology to securely manage and store user assets. In the MPC crypto wallet, the private keys used to access and manage the user’s cryptocurrency are divided into several parts, known as “shares,” which are distributed among the parties participating in the MPC protocol.
The main advantage of using MPC in a crypto wallet is that it allows users to securely manage their cryptocurrency without a single party having access to all of their private keys. This can help protect against various attacks, such as hackers trying to steal a user’s cryptocurrency by compromising one party’s private key portion.
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MPC crypto wallets typically use a combination of cryptography and secure communication protocols to enable different parties to manage users’ cryptocurrency. The process may involve complex calculations and communication between parties, but the result is a safe and efficient way to manage users’ cryptocurrency assets.
Crypto wallets like ZenGo use multi-party computing to increase wallet security, and Coinbase has a feature enabled for non-custodial wallets. As a result, the MPC crypto wallet can increase security and protection against certain attacks. However, they also require more computing resources than other crypto wallets.
Advantages and disadvantages of multi-party computing crypto wallets
The main advantage of the MPC crypto wallet is that it can provide higher security for users’ cryptocurrency assets by separating the private keys used to access and manage cryptocurrency into multiple parts and distributing these parts among different parties.
Tal Be’ery, co-founder and chief technology officer at crypto wallet ZenGo, told Cointelegraph, “MPC solves the most pressing cryptocurrency problem: Single Point of Failure (SPOF) of private keys. This SPOF is the main reason users lose funds: What with one’s private key, stolen private key, or accidentally sharing a seed phrase through a phishing scam. He continued:
“With MPC, an indivisible private key is replaced by a number of distributed secrets often called ‘shares’, so that a quorum of shares can sign a message in a distributed fashion – without creating a private key.”
Be’ery mentions how separating pieces of private keys and storing them in different locations makes it harder for malicious actors to compromise users’ wallets.
“If each of these stocks is held in orthogonal places (for example, mobile devices and servers), then it makes orders of magnitude more complicated for hackers to steal, because attackers have to steal from different places in different ways. ,” said Be’ ery.
“This type of architecture also solves the dilemma discussed above: Creating a shared copy as a backup against loss is much easier, as no one share represents ‘the only’ private key,” he added.
Parth Choudhary, founder and CEO of Glip – a gaming app and Web3 wallet – also told Cointelegraph, “MPC can make wallet providers unable to get users’ money or control it. It can also make it harder for hackers and other bad guys to steal private keys.”
The MPC cryptocurrency wallet has several advantages over traditional wallets. MPC wallets are more reliable because they can ensure that user assets are still accessible, even if one or more parties are unavailable or unresponsive. Privacy is also good because private keys are divided into multiple shares and distributed among multiple parties.
By preventing a single party from finding the user’s full private key, it is possible for the user to lose their funds. Security is also improved as computations are performed on encrypted output, preventing malicious parties from learning sensitive information.
However, there are also some potential downsides to using MPC crypto wallets. One of the drawbacks is the complexity associated with the MPC protocol, especially for non-cryptographers. As such, MPC wallets can be more challenging to set up for the average person.
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In addition, due to the computational resources required by the MPC protocol, it may be slower to operate. In this regard, the MPC wallet may be less efficient than other crypto wallets. Finally, not all cryptocurrency assets can be managed using MPC crypto wallets, and some assets may be difficult or impractical to manage using MPC.
Wallet security is always important to anyone using cryptocurrency, and the need for self-protection has become even more apparent with the collapse of several high-profile cryptocurrency companies and the loss of millions of user funds.
The decision to use an MPC crypto wallet will depend on the user’s specific needs and requirements. For example, it may be useful for users who prioritize security and privacy, but some people prefer simpler solutions.