Multiparty computing could offer more protection for crypto wallets

Multiparty computation (MPC) is a type of cryptographic protocol that allows multiple parties to jointly compute a function over their inputs without revealing those inputs to each other.

MPC can be useful when parties want to compute a function together, but want to keep their inputs private from others. For example, a group of banks may want to determine the total amount of money in their joint account without disclosing each other’s account balances.

In MPC, each party has a secret entry that they keep to themselves. The process is carried out by carefully encrypting the input and performing calculations on the encrypted values ​​so that the final result is the desired function while keeping the values ​​secure.

MPC protocols typically involve multiple rounds of communication between parties that exchange encrypted messages and perform various computations on their own inputs.

MPC is a complex and technical subject and there are many variations and approaches to implementing the MPC protocol. Some key challenges in designing the MPC protocol include ensuring that the protocol is secure against various attacks, such as attempts by malicious parties to learn the inputs of other parties, and ensuring that the protocol is efficient with respect to computing resources and communication costs.

What is a multiparty crypto wallet?

A multiparty crypto wallet is a crypto wallet that uses MPC technology to securely manage and store users’ assets. In an MPC crypto wallet, the private keys used to access and manage a user’s cryptocurrency are divided into multiple parts, known as “shares”, which are distributed among the parties involved in the MPC protocol.

A key advantage of using MPC in a crypto wallet is that it allows users to securely manage their cryptocurrency without any party having access to the entire private key. This can help protect against various attacks, such as hackers trying to steal a user’s cryptocurrency by compromising one party’s private key.

Recently: Remote work could redefine the global workforce forever

MPC crypto wallets typically use a combination of cryptography and secure communication protocols to allow different parties to jointly manage a user’s cryptocurrency. The process may involve complex calculations and communication between parties, but the result is a safe and efficient way to manage a user’s cryptocurrency assets.

Crypto wallets such as ZenGo use multiparty computing to improve wallet security, and Coinbase has enabled a feature for its custodial wallet. As a result, MPC crypto wallets can provide increased security and protection against certain attacks. However, they also require more computing resources than other crypto wallets.

Pros and cons of multiparty crypto wallets

The main advantage of MPC cryptocurrency is that it can provide increased security for users’ cryptocurrency assets by dividing the private keys used to access and manage the cryptocurrency into multiple parts and distributing those parts between different parties.

Tal Be’ery, co-founder and chief technology officer at crypto wallet ZenGo, told Cointelegraph, “MPC solves the most pressing problem in cryptocurrency: the single point of failure (SPOF) of the private key. This SPOF is the main reason users lose their funds: whether they lose their private key, have their private key stolen, or accidentally share their seed phrase through a phishing scam.” He continued:

“With MPC, the indivisible private key is replaced by multiple distributed secrets often called ‘shares,’ so that a quorum of those shares can sign a message distributively — without generating a private key.”

Be’ery mentioned that separating parts of the private key and storing them in different locations makes it difficult for malicious actors to compromise a user’s wallet.

“If each of these parts is kept in an orthogonal place (eg mobile device and server), it is much more complicated for hackers to steal, because the attacker would have to steal from multiple independent places in different ways. ”, Be’ery said.

“This kind of architecture also solves the dilemma discussed above: Creating copies of shares as a backup against loss is much easier, because no single share represents the ‘only’ private key,” he added.

Parth Choudhary, founder and CEO of Glip — a Web3 gaming app and wallet — also told Cointelegraph, “MPC could make it so the wallet provider can’t access or control users’ money. It can also make it harder for hackers and other bad guys to steal private keys.”

MPC cryptocurrency wallets have some advantages over traditional wallets. MPC wallets are more reliable because they can ensure that the user’s funds are still available, even if one or more parties become unavailable or unresponsive. Privacy is also improved because private keys are divided into multiple shares and distributed between different parties.

By preventing any party from revealing the user’s complete private key, the user has a reduced possibility of losing their funds. Security is also improved as calculations are performed on encrypted outputs, preventing malicious parties from learning sensitive information.

However, there are some potential downsides to using the MPC crypto wallet. One of these disadvantages is the complexity associated with MPC protocols, especially for non-experts in cryptography. So an MPC wallet can be more of a challenge to set up for the average person.

Recent: Crypto cancellations rise as exchanges continue to wreak havoc in prevailing bear market

In addition, due to the computing resources required by MPC protocols, they can run more slowly. In this sense, the MPC wallet may be less efficient than other crypto wallets. Finally, not all cryptocurrency assets can be managed using MPC Crypto Wallet, and some assets may be difficult or impractical to manage using MPC.

Wallet security has always been important to anyone using cryptocurrency, and the need for self-custody has become increasingly apparent with the collapse of several high-profile cryptocurrency companies and the loss of millions in user funds.

The decision to use the MPC crypto wallet will depend on the specific needs and requirements of the user. For example, it may be useful for users who prioritize security and privacy, but some people may prefer a simpler solution.