Multi-parry computation (MPC) denotes a cryptographic method that enables several parties to mutually compute a function while keeping their inputs undisclosed. This technique offers many practical applications like secure digital asset transfer and storage using MPC wallets. This article will delve into the MPC wallets, the difference between multisig wallets, their benefits, their downsides, and use cases.
Multi-Party Computation: An Introduction
Multi-party computation or secure multi-party computation provides a way for a group of people to jointly work on something. This technique ensures the privacy of the data, particularly on the internet as it is hard to keep secrets there. For instance, if 3 blockchain developers in a Web3 venture intend to determine the average salary without revealing their wages to a 3rd-party or one another amid the calculation process, they can engage in MPC.
In this respect, the employees would utilize a multi-party computation protocol for the calculation of their average payouts without revealing private or sensitive information. The protocol would utilize additive secret sharing (a famous cryptographic technique), involving distributing and dividing a secret among a group of autonomous parties. Hence, an outer party could determine the average wages without directly interacting with the developers.
How Does an MPC Wallet Work?
Just like its name, an MPC wallet leverages multi-party computation to provide improved security for digital assets. It primarily splits the private key of a wallet among several parties to enhance privacy while minimizing the hazards of breaches, losses, and hacking. However, it is dissimilar to multisig wallets.
Difference Between MPC Wallets Multisig Wallets
A multisig wallet performs blockchain transfers via an exclusive signature requiring the authentication of 2 or additional private keys with one private key dealing denoting each party. MPC wallets, on the other hand, divide one private key among several parties. Although both these wallet technologies seem similar, the MPC wallets’ technical implications make their implementation easier and more flexible.
Advantages of MPC Wallets over Other Wallets
Among diverse crypto wallets, custodial wallets manage and hold private keys and assets. Contrarily, non-custodial wallets permit consumers to control and hold private keys. The non-custodial wallets are often perceived as secure storage options while consumers do not require trusting a 3rd party or a service provider with the keys.
Nonetheless, being in complete control over the keys and wallets also has some disadvantages, particularly for beginners. The respective wallets usually need some level of technical expertise. The consumers need to ensure the safety of their keys.
In contrast, MPC wallets can deliver the best of these both aspects. They are gaining significant popularity because of their improved convenience and security. They reportedly eliminate or minimize the issues that the other wallets face. Shortly, the MPC wallets offer increased privacy as they encrypt data without the need to trust any 3rd-parties. Additionally, they improve security by removing single failure points and spreading the secret key among multiple locations and parties. Moreover, they provide additional convenience in online asset holding without requiring cold storage.
The Disadvantages of MPC Wallets
Along with their upsides, MPC wallets also have some downsides. One of them is their slow nature. The improved security often paves the way for slower performance. This requires additional computational work, particularly when creating private keys as well as secret shares. Apart from that, the MPC wallets charge higher costs. The computation and sharing of data between several parties and networks can contribute to substantial cost increases.
Use Cases of MPC Wallets
MPC technology has turned into a priority for resilient security solutions among top institutions based on the benefits it provides. Popular companies like Revolut have reportedly begun the use of MPC to prevent outside and inside threats to secure assets.
In addition to this, the recent spike in consumer-focused product innovations has also contributed a lot to promoting the MPC wallets. With their use, the consumers can reach the wider Web3 ecosystem. For example, selling and purchasing non-fungible tokens through prominent NFT marketplaces is now more convenient with the MPC wallets.
To go for the finest MPC wallet the users need to review the key areas. The respective aspects take into account dApp connectivity, wallet security, user interface design, user experience, native features, and customer support. With these qualities, an MPC wallet works as the foundational infrastructure piece to facilitate institutional custodians, traders, and investors. Thus, they should choose the most suitable wallet in line with their respective requirements.
Conclusion
In line with their noteworthy benefits, MPC wallets have turned into a sophisticated solution guaranteeing digital asset privacy and security. Despite their certain limitations, they have become an increasingly widespread choice based on their enhanced privacy, and security, as well as decreased dependence on conventional storage options. With the continuous evolution in the digital asset realm, MPC wallets are anticipated to significantly contribute to securing information and assets.
