In the world of cryptocurrencies, a fundamental concept is cryptocurrency wallets. These systems help us to store and manage our cryptocurrencies securely. One of the most secure wallets currently available is the MPC Wallet.
These wallets owe their security to a collaboration of technologies focused on offering unimaginable security, both at an enterprise and military level. Their main objective is to safeguard our cryptocurrencies in such a way that they are inaccessible without the necessary permissions to mine them.
History of MPC
The technology that brings this high security to MPC wallets is multiparty computing or MPC. The concept of multiparty computing was born in 1970. This concept is based on cryptographic security. This technology is currently included in various chips in smartphones and computers.
The idea of creating this technology came from the need for a technology in which security models could be enabled where a variety of parts are required to access the system. Each of the parts allows the system to be unlocked, depending on the level of access. It was not until 1990 that this concept came to life thanks to David Chaum, a pioneer in the cryptographic world who presented an elaborate paper on this protocol. The paper was called “Unconditionally Secure Multiparty Protocols“.
How does this technology work?
MPC wallets or multiparty computation wallets represent the generation of wallets for tokens and cryptocurrencies oriented to offer the highest security standards both for users interested in greater security, as well as for certain companies, banks and governments that plan to establish cryptocurrencies as assets of great relevance in their investments.
To understand it better, we can see an MPC wallet as a common wallet simply by taking into account the difference that the passwords and control of these devices are stored between different devices.
Each of the devices that store the keys has a key and, once it is joined with the rest, it will enable the use of the funds. As we can see, the operation is very similar to that of multi-signature wallets. The difference is that MPC wallets have other improvements that offer advantages. One example of these improvements is the fact that the devices in charge of control are able to create dynamic one-time passwords that expire after a short period of time. Such passwords, when added to each other, enable the use of the wallet’s assets.
Another feature to note is that MPC wallets can employ schemes such as ECDSA, as well as more up-to-date signature formats such as threshold signatures, Schnorr signatures, and other additional security schemes.
In short, it is a wallet linked to several single-use key generators, and these in turn give us access to the cryptocurrencies they store. As the generators are dynamic and single-use, it guarantees that a key will never be repeated. If for some reason the sequence is incomplete, the user simply cannot access the funds. This means that, although we can access a wallet and find the rest of the keys, they may have expired or have been used before so the funds will be inaccessible.
As we can see, the security level is remarkably high. This makes it possible to erect barriers that make it almost impossible for hackers to steal the cryptocurrencies stored in the wallet. It should be noted that this control mechanism can be applied to several cryptocurrencies simultaneously. In this way we simplify token security management.
How does an MPC Wallet work?
Each MPC Wallet may function differently from the rest, varying in some features. However, the great majority of them coincide in certain basic aspects. The operation of an MPC Wallet is divided into three essential parts: key generation, address generation and access to funds. In the following we will see what each one consists of in detail.
Key generation
This represents the whole process where private and public keys are generated within the wallet. However, it also generates the registration of the private and public keys of the wallet’s unlocking devices.
This is how the unlocking devices develop a public and private key pair. Subsequently, they are joined to those of the rest of the devices in order to generate the private and public key of the MPC wallet. This scheme tries to distribute the control of the wallet to avoid that a hacker can take control of the wallet in a simple way as well as in the same way as a multi-signature wallet.
It should be noted that the way these keys are generated is given by a protocol defined by a very simple mathematical formula: nF(d1, d2, d3) = max(d1, d2, d3).
You may be thinking that this formula is too complicated and difficult to understand, however, it simply means that each participant has in its possession a private data that would be from d1, d2…dN. Thanks to this private data, by using a public function called F we can calculate how much the private data is worth as well as enable the use of the wallet. For this we use the cryptographic signature algorithm which can be either ECDSA, EdDSA, Schnorr, or any other compatible one. If we add all these private data we obtain as a result a cryptographic reason that provides access to the wallet.
Address generation
In this case, MPC wallets are very similar to the ones we already know. The generation of a public key can be requested by either party. The generated address can be used to receive funds.
This is possible thanks to asymmetric cryptography. The security of sharing the public key is due to the complexity of performing the process opposite to the generation of the public key. It is therefore safe to generate public keys for each member.
As for the private key, the goal of the MPC wallet is to keep the private key divided among several devices to avoid easy balance control.
Access to funds
In order to access the funds, the conditions determined during the creation of the MPC wallet must be fulfilled. If four devices with private data were entered during generation, these four devices must be present to access the wallet.
To protect these devices, cryptographic systems, security modules such as HSM or other security features are often used. In fact, only originally paired devices will be able to access the MPC wallet and the funds.
