Know what an MPC wallet or purse is, one of the safest means to store cryptocurrencies that currently exist.

Lto safety in the world of cryptocurrencies is an issue that is taken very seriously, and one example of this is the development of the well-known MPC wallets or purses. These purses They are the union of several technologies focused on offering the highest possible security, business and military grade security, in order to protect cryptocurrencies in a way that it is virtually impossible to extract them, without the necessary permissions for it.

However What exactly is an MPC Wallet? What makes them so safe? These and other questions will be answered in this article dedicated to getting to know these new cryptocurrency wallets.

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What is multiparty computing or MPC?

Before moving towards what is an MPC purse or wallet, it is good to first know what exactly MPC or multi-party computing is. MPC or Multiparty Computing, is a concept of cryptographic security. One created in order to enable security models in which various parts are necessary to access the resources of a system. Each of the parties maintains a key that, when joined to the rest, allows access to the system to be unlocked and controlled. This control can be complete or partial, depending on the level of access granted.

The design of these protocols dates back to 1970, and they have been evolving to the point that today, many of these systems are even embedded in computer chips, in order to help maintain the security of computer systems.

Due to its great possibilities, the crypto community has remained strongly interested in this type of technology. In fact, David Chaum In 1988, he presented a well-known work under the name of "Unconditionally secure multi-party protocols". On the other hand, Nick Szabo, in 1999 he also presented a well-known work called "God's protocols", also explaining the possibilities of MPCs in the world of computing and their use in economic and financial systems. This offers us a clear idea of ​​the importance of these protocols, and their arrival in the world of cryptocurrencies.

MPC wallets, security taken to the extreme

The MPC wallets or multi-party computing wallets, which is the full name of these wallets, are a generation of wallets for cryptocurrencies and Tokens which aims to offer the highest security standards both for individuals concerned about security, as well as for companies, banks and governments that aim to turn cryptocurrencies into a relevant asset for their operations.

Basically, an MPC wallet is a wallet like any other, except that the private keys and their control are divided between several devices. Each of these devices has under its control a key that, when joined to the rest, enables the use of the funds within said wallet. At first glance, it seems that we are talking about a wallet or multi-signature purse, and to some extent, the construction of the MPC wallets is identical.

This with the exception that the MPC wallets include other improvements, such as the fact that the control devices can generate dynamic keys for a single use and with an expiration of time, which when added to the rest, enable the use of funds. In addition, MPC wallets can use schemes like the common ECDSA, EdDSA, other more up-to-date signature formats such as threshold signatures, Schnorr firms, or other additional security schemes.

Imagine for a second, a wallet linked to several single-use key generators, which together give you access to your cryptos. The fact that the generators are dynamic and single-use guarantees that a key will never be repeated, and if the sequence is not complete, you simply will not be able to access the funds. This means that while you can access a device and copy the rest of the wallet keys, if those keys have expired or have been used, the funds will be inaccessible. This level of security allows creating barriers that hackers can hardly break, avoiding such painful episodes as hacking Mt Gox, or even loss of access from QuadrigaCX.

Another point in favor of the MPC wallets is that the control mechanism is applicable to several cryptocurrencies at the same time, greatly simplifying the security management of the tokens.

Integration between hardware and software

Another important point of the MPC wallets is that they can have a greater integration between the hardware and the software that compose them. For example, an MPC wallet can be an isolated device that can be synchronized with the signature devices, and this synchronization occurs through a cryptographic system enabled by modules. HSM (Hardware Security Modules), which would make such funds practically unreachable through an online attack, and practically invulnerable to hacks of some kind. If the devices synchronizing are not as expected, the synchronization simply does not occur, and access to the device is prevented.

Of course, this is customizable. For example, in emergencies, the wallet can be set up to perform a "recovery transaction" that sends these funds to a secure custodian, in order to recover balances. This case would prevent, for example, after theft, loss of keys or devices, the funds are held for life in the MPC wallet, allowing their recovery without problems.

These types of integrations and new options make MPC wallets much safer than normal wallets or even multi-signature wallets. However, it also makes them more expensive, and difficult to handle in everyday use environments, hence, this type of technology is designed for companies, exchanges or people who handle large amounts of cryptocurrencies and want the highest security for them.

How does an MPC wallet work?

The operation of an MPC wallet depends a lot on its implementation and the security mechanisms that are active in it. However, in a very basic way, the operation of an MPC wallet can be divided into three parts:

Key generation

Key generation includes the entire process of generating private and public keys within the wallet. But also, the registry of the private and public keys of the devices of liberation of the purse.

In this sense, the unlocking devices generate a pair of public and private keys, which are then joined to the rest of the devices, to generate with them the private and public key of the MPC wallet. As in a multi-signature wallet, this scheme seeks to divide control of the wallet to prevent a hacker or malicious actor from being able to get hold of it easily.

Additionally, the generation of these keys is given by a very specific protocol, defined by the mathematical formulation:

F (d1, d2, d3) = max (d1, d2, d3)

This means that; each of the participants each has a private data (recognized as d1, d2, up to dN). The inclusion of these private data allows the use of a public function called F. With it, the value of the private data is calculated and the use of the wallet is enabled. The algorithm in this case is the chosen cryptographic signature algorithm, which can be ECDSA, EdDSA, Schnorr, or any other compatible one. As a result, the sum of these private data provides a cryptographic certainty necessary to give access to the wallet.

Address generation

At this point, the MPC wallets do not differ from the wallets that we already know. The generation of public keys can be requested by any of the signing parties without problems. In this way, the desired funds can be received through that address.

This is possible thanks to how asymmetric cryptography works. The derivation of the public key is so complicated that doing the opposite process is practically impossible. So it is safe to generate a public key for each participant. And, that from it, other public keys can be derived that allow the allocation of funds to the MPC wallet. In this sense, the objective of the MPC wallet, which is to maintain control of the private key divided into several devices. Thus, the control of balances is hardly at risk.

Access to funds

Like the generation process, access to funds is possible only if the conditions determined when creating the MPC wallet are met. If in the generation, three devices with private data were introduced, these three devices must be present for access to the wallet.

At this point, the protection of the devices may lie with cryptographic systems, security modules (HSM) or other security features. The truth is that only the originally paired devices will be the only ones capable of accessing the MPC wallet and controlling the funds.

How much do you know, cryptonuta?

Is the security of MPC wallets less than that of multi-signature wallets?

FALSE!

The security of the MPC wallets or purse is usually seen on par with, and even, superior to that of the multi-signature wallets or purses, because the MPC wallets are a union between the multi-signature technology, which is additionally driven by computer equipment and systems. much more secure multiparty cryptography.

MPC wallets today

Currently there are already several functional MPC wallet implementations, which you can use in the crypto world.

The service Fireblocks, is one of those that offer MPC wallet for companies that require it. Sepior, is another service of the same type and with quite similar purposes. Another well known service is Curv, which has perhaps one of the largest MPC services in the crypto world.

Another well known MPC wallet designed for personal use is zengoAlthough this is a bit of a trap, since it is not an MPC wallet in the strict sense of the word. Instead, it is a two-part system where your smartphone communicates with ZenGo's servers. Thus, a secret is shared and the signature of transactions is enabled together to be sent to the network. A more secure model than web wallets, but one that still has its weak points, however, it is still a striking technology.

If, on the other hand, you like to experiment, there is a free software implementation capable of helping you with this. We are talking about Blockchain Crypto MPC, a project started by Unbound Tech, which allows you to create an MPC service tailored to your needs.

Do you want to start enjoying the world of cryptocurrencies? Then it is time to open your Bit2Me user account. It is very easy to do and, in addition, following this link You will get € 5 totally free on your first purchase at Bit2Me.