What is mpc wallet?

What Is an MPC crypto wallet?

An MPC wallet is a form of crypto-wallet that uses more than a single participant to verify, sign, and authorize transactions. It essentially divides a single private key among numerous holders involved in asset custody and the outgoing transaction process. The term “MPC” is an abbreviation for multi-party computation. It uses multi-party computation to deliver robust security and privacy.

How Does the MPC Wallet Work?

The functionality of the MPC crypto wallet relies on its architectural implementation and security mechanism. With the MPC wallet, what really matters is exactly how the keys addresses are generated.
The creation and storage of private and public keys are integral to the key generation and management process. The MPC wallet employs asymmetric cryptographic principles to generate keys and share them.
Just like any other wallet, the MPC wallet employs public keys and addresses to send and receive funds.
MPC wallet protocols employ crypto-graphic concepts such as additive secret sharing to divide and distribute the secret key among a group of independent entities or parties. The existing MPC protocol allows you to conceal your private information while efficiently computing data from numerous sources.

Susceptibility to cyber-attacks.

Security flaws, breaches, and other forms of vulnerabilities are the key concerns for most investors and traders. There are numerous bug-bounty programs and open-sourced debugging initiatives in place to ensure that the source code is bug-free. A single hack is enough to compromise security protocols and steal investor’s funds. In the past, a vulnerability was discovered within the GG18 algorithm, extensively employed by well-known exchanges to implement MPC protocols. Even though malicious actors did not exploit the bugs, they still existed for a long time. Essentially, the underlying GG18 algorithms had no zero-knowledge range proof in place. In the absence of ZK-range proof, the hacker could have forced the wallet holders to share their private keys – which would have led to a significant loss. To secure investors against such a terrifying scenario, the vulnerability was patched by security experts. This led to the creation of the MPC-CMP protocol. The MPC-CMP protocol is shipped with enhanced security features that safeguard your keys. It provides you with advanced self-custody features. With an MPC wallet, you don’t have to lose your crypto-investments in the mismanagement of the keys.

Why Use an MPC Wallet?

According to experts, the key reasons why you should use an MPC wallet encompasses:

• Safety

Unlike centralized custodial wallets, where all keys are managed by an external entity, a non-custodial MPC wallet gives you complete control and access to your private keys. Not just individuals but also institutions can hold their assets using an MPC wallet. The best part – no one person needs to manage the MPC wallet keys. Financial institutions are securing a certain portion of their portfolio using MPC wallets.
Multiple-chain and numerous cryptocurrency support
You might own a varied range of crypto-tokens from Ethereum, Bitcoin, Solana, Polygon, or others. But where to store it? Both MPC wallet and multisig wallet let you store your basket of crypto-assets. With multisig wallet, you have to manage multiple private keys. This is not the case with MPC wallets. It is designed to eliminate the need for juggling through multiple signatures. You and your associates can manage the entire portfolio of crypto-investments using single, shared signature systems, also known as threshold signature schemes. But MPC wallet’s single, shared private key architecture comes with its own shortcomings.

• Fees

The fees vary based on network congestion status. Usually, gas fees boost up when a lot of users require access to blockchain network infrastructure. But when demand for network availability is low, the gas fees also go down. The gas fees associated with transactions initiated using an MPC wallet are relatively lower but vary significantly. No matter the number of users involved in the MPC wallet operations, the fees usually stay the same or within a fixed range.

MPC VS MULTISIG WALLETS: WHAT’S THE DIFFERENCE?

• Compatibility

MPC crypto wallet is engineered to be adaptable. This is why MPC wallets employ simple public addresses to function and interact with a wide range of decentralized and associated crypto services. You can deploy an MPC wallet across multiple platforms and devices. You can customize authorization settings based on your convenience and requirement.
The multi-signature wallet is engineered to be adaptable as well. It is compatible with a number of platforms and multiple blockchain protocols.

• Privacy

With MPC wallet, you can hide your identity as well as the identities of your parties participating in the transaction signing process.
Instead of sharing all your private data, a multi-sig wallet allows you to share your public address with other parties or with anyone on the internet.

• Computation

In order to offer robust security and privacy, the MPC wallet incurs huge computational costs. The private key’s random number generation process is a computationally intensive task. It leads to increased transaction processing time and slower processes.
Multisig wallets usually don’t involve computation-heavy tasks. Standard key generation processes are employed to create private keys and public keys for your wallets. Low computational overhead is among the key reason why a multisig wallet is able to initiate and process transactions without delays and promptly, on demand.