Multi-party computation (MPC) is a cryptographic security technique enabling multiple parties to perform computational tasks without revealing any personally-identifiable information or associated secret information held by each party. It's the next logical evolution of private key security.
MPC wallets leverage this critical cryptographic measure that offers an adequate solution to the constant security and privacy threats intrinsic to large distributed networks holding big amounts of data – especially within the context of distributed ledger or blockchain technology, where development teams often rely on multisig wallets to conduct their on-chain business with.
This article will give you a quick rundown on everything you need to know about MPC wallets, such as their features, functions, benefits, and drawbacks, as well as the leading smart contract wallet solutions out in the market today. We'll also show you what features you need to look at to choose the best MPC wallet for your purpose.
Multisig wallets and MPC wallets are among the most common technologies for securing digital assets, with multi-sig and MPC technologies among the predominant ways to store private keys.
However, as we will see, MPC wallets are superseding traditional multisig wallets as per the requirements of the rapidly-evolving digital asset space as institutional investors break into it in drove.
MPC technology eliminates the concept of a single point of failure as multi-sig wallet users expose themselves to, adding another layer of security and privacy that new requirements dictate – not to mention true, structural anonymity that protects secret data.
MPC wallets, in a nutshell, use multi-party computation technology to securely manage digital assets on-chain. Unlike traditional wallets, MPC wallets employ advanced cryptographic techniques to ensure that the user's private key is never stored nor viewable on any one location.
The idea of a single private key is abolished, where, in MPC technology, it is never gathered, such that there is no single point of compromise possible for the private key. The private key is never collected on a single device at any point in time. In doing so, it eliminates the persistent security threats from external and internal threat actors, particularly for organizations that manage and transact with digital assets on non-custodial wallets.
Unlike multisig wallets, MPC wallets are supported on a larger number of EVM-enabled blockchains, offering institutions infinitely greater flexibility to manage digital assets on different chains – and interact with them securely and privately. Multisig wallets, on the other hand, lack the operational flexibility that is a prerequisite for institutional and organizational growth.
The case for using MPC wallets is strong: in particular, the lack of need to trust third parties, enhanced security, no single point of failure, and improved data privacy. Here are the most salient benefits of using MPC wallets:
MPC wallets do have their drawbacks, which users ought to be aware of when using the technology as follows:
The advent of MPC wallets comes at the perfect time, offering significantly improved privacy, security, and flexibility with web3 wallet UX. MPC wallets, in particular, are the perfect wallet for institutions, teams, and organizations because of their intrinsic risk mitigation, efficient asset management, and advanced security controls.
Here are the primary use cases for MPC wallets:
Krayon is a Singapore-based web3 company focused on providing secure custody and MPC-based digital wallets, founded in 2022 by former executives in the cybersecurity and fintech sectors.
Krayon offers institutional-grade crypto custody with its MPC wallet solutions. Besides enterprise-level security protocols to defend users from hacks, exploits, or phishing attempts, Krayon comes without the high-cost enterprise pricing tiers.
Krayon has tailored our services specifically for smaller to medium-sized teams, companies, and institutions. In particular. Krayon will be a great fit for:
and many others who wish to manage their own digital assets with cutting-edge MPC technology.
Our platform offers superior security, scalability, and interoperability compared to "traditional" options like Gnosis Safe but at a significantly more affordable price point than Fireblocks or Copper.
Krayon currently supports Bitcoin, Ethereum, and Polygon (with support for other cryptos like Tron in the works).
Fireblocks is an institutional digital asset custodian offering MPC wallets. The platform's use of MPC technology and hardware security enables optimal security, reduces transaction costs, and meets service-level agreements.
Fireblocks has notable clients such as Standard Chartered and Northern Trust among its clientele, which sums up its reputation as a high-cost solution suited for big corporations and institutions rather than small to medium-sized organizations, businesses, or investors with less than $100 million in digital assets.
Copper is another custodian offering an MPC wallet solution, which, like Fireblocks, caters to larger institutional clients.
The custodial platform features a proprietary system using innovative key-sharding techniques to verify and authorize transactions, with an underlying MPC technology base to ensure optimal levels of security and key management encryption.
Copper enables trading firms to retain independent custody of their digital assets, allowing institutional investors and hedge funds to actively trade cryptos on centralized exchanges.
However, Copper and its MPC wallet development project is largely seen as one of the more expensive custody and MPC wallet providers out there, with fee schedules more appropriate for large-scale institutions.
Prior to the advent of MPC technology, DAOs, organizations, and companies largely relied on multisig wallet provider Gnosis Safe.
However, as we have mentioned earlier, multisig wallets have drawbacks that make them too complex for many users.
For instance, Gnosis Safe lacks the same level of interoperability and scalability that MPC wallets possess due to the simple fact that not all blockchain protocols support multisig wallets.
Every blockchain protocol has its own distinct private key implementation for multisig, making it hard for Gnosis to provide ongoing, stable support for new blockchains.
Moreover, unlike MPC wallets, multisig wallets like Gnosis aren't typically protocol-agnostic, whereas MPC wallets are available and work with any EVM-supported chain and dapps.
Lastly, the main knock on multisig wallets like Gnosis is that it requires separate keys for multiple parties to sign transactions with. What this means is that third parties can see how your policies are configured, enabling them to trace who your co-signers or authorized parties are.
Whereas on MPC, only the final signature is recorded on-chain, meaning the entities involved, as well as your authorization policy, remains private.
Ultimately, there is not a single MPC wallet that is "the best" for every user. It all depends on the requirements of the user.
Here are some of the key areas you need to review before choosing an MPC wallet solution:
That said, if you're an individual investor, a small team, or a small to medium-sized organization looking to use MPC custodial solutions for its added utility, security, and efficiency, Krayon is your best option, being the only MPC wallet solution focusing on small to mid-market institutions, corporates, and retail clients in the nascent space.
Plus, with Krayon, you get the same institutional-grade security and custody like Fireblocks and Copper, without the institutional price tags.
Krayon's built-in ability to set custom governance rules makes it a viable option for any business while allowing room for smaller entities to scale accordingly.
However, if you are an institutional investor holding over $1 billion in assets under management, high-cost enterprise grade solutions like Fireblocks and Copper might be more appropriate for you.
