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Multi-Party Computation (MPC) is a type of cryptographic protocol that allows multiple parties to jointly compute functions on their inputs without revealing those inputs to each other.
MPC is useful when participants want to compute several functions together, but want to keep their inputs private from others. For example, a group of banks may want to determine the total amount of a joint account without exposing account balances to each other.
In MPC each party has a secret input and keeps it secret. This process is done by carefully encrypting the input and performing computations on the encrypted value to keep the value safe while ensuring that the final result is the desired function.
The MPC protocol typically 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 key challenges in the design of the MPC protocol include ensuring that the protocol is secure against various attacks (such as malicious parties trying to learn the input of other parties), and This includes ensuring that is efficient in terms of computational resources and communication costs.
What is a multi-party computational crypto wallet?
A multi-party computational crypto wallet is a crypto wallet that uses MPC technology to securely manage and store users’ assets. In an MPC crypto wallet, the private key used to access and manage a user’s cryptocurrency is divided into multiple parts called “shares” and distributed among the parties involved in the MPC protocol.
The main advantage of using MPC in crypto wallets is that users can safely manage their cryptocurrencies without having access to the entire private key. This helps protect against a variety of attacks, such as hackers trying to steal a user’s cryptocurrency by compromising a single party’s private key sharing.
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MPC crypto wallets typically use a combination of cryptography and secure communication protocols to allow various parties to jointly manage a user’s cryptocurrency. This process may involve complex calculations and communications between parties, but the result is a safe and efficient way to manage your cryptocurrency assets.
Cryptocurrency wallets like ZenGo use multi-party computation to improve wallet security, and Coinbase has this feature enabled in their uncustodial wallets. As a result, MPC crypto wallets can provide enhanced security and protection against certain attacks. Still, it requires more computational resources than other cryptocurrency wallets.
Advantages and Disadvantages of Multi-Party Compute Crypto Wallets
The main advantage of MPC cryptocurrency wallets is to divide the private keys used to access and manage cryptocurrencies into multiple parts and distribute those parts to various parties, thereby increasing the value of users’ cryptocurrency assets. It is possible to strengthen security.
Tal Be’ery, co-founder and CTO of cryptocurrency wallet ZenGo, told Cointelegraph: This SPOF of him is the main reason users lose their funds. Misplaced private keys, stolen private keys, or accidentally shared seed phrases through phishing scams. ‘ He continued:
“With MPC, an indivisible secret key is replaced by multiple distributed secrets, often called ‘shared’, so that a quorum of these shares can distributely sign messages without creating a private key. Become. ”
Be’ery noted how isolating and storing private key fragments in separate locations makes it harder for malicious actors to compromise users’ wallets.
“If each of these shares were held in orthogonal locations (e.g., mobile devices and servers), it would be orders of magnitude less likely for a hacker to steal because they would have to steal from multiple independent locations in a variety of ways. It gets really complicated,” said Be’ery.
“This type of architecture also solves the aforementioned dilemma: making a copy of a share as a backup against loss is much easier because there is no share representing the ‘unique’ private key,” he said. Added.
Parth Choudhary, founder and CEO of Glip, a Web3 game and wallet application, also told Cointelegraph: It can also make it harder for hackers or other malicious individuals to steal your private key. ”
MPC cryptocurrency wallets have several advantages over traditional wallets. MPC wallets are more reliable because they can ensure that users’ assets continue to be accessible even if one or more parties become unavailable or unresponsive. Privacy is also improved as the private key is split into multiple shares and distributed to various parties.
By ensuring that the user’s full private key is not known to anyone, the user’s chances of losing funds are reduced. Security is also improved, as calculations are performed on encrypted output, preventing malicious individuals from learning sensitive information.
However, using an MPC crypto wallet also has some potential drawbacks. One of these drawbacks, especially if you are not a cryptography expert, is the complexity associated with the MPC protocol. As such, MPC wallets can be more difficult to set up for the average person.
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Additionally, the MPC protocol requires computational resources and can be slow. In this regard, MPC wallets may be less efficient than other crypto wallets. Finally, not all cryptocurrency assets can be managed using an MPC crypto wallet, and some assets may be difficult or impractical to manage using MPC.
Wallet security has always been important to anyone using cryptocurrencies, and the bankruptcies of several prominent cryptocurrency companies and the loss of millions of dollars in user funds have made the need for self-custody even more apparent. became.
The decision to use an MPC crypto wallet depends on the specific needs and requirements of the user. For example, it may be useful for users who prioritize security and privacy, but others prefer a simpler solution.
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