💸 What is an MPC wallet?

The MPC wallet “splits” the private key into fragments, which are stored by different parties on different devices.

What is multi-party computation (MPC)?

Multi-party computation (MPC) is a set of cryptographic protocols that allow multiple parties to perform joint computations without revealing the participants' input data.

An MPC wallet is a cryptographic tool that eliminates dependency on a single key by distributing independent, shared keys. This decentralized approach ensures there is no single point of vulnerability, so even if one device is compromised, your assets remain safe.

How is MPC used in cryptocurrency wallets?

The MPC wallet is an innovative approach to a message signing system. Initially, there was a technology using one key on one side. Later, multisig wallets entered the market, where a transaction must be signed by several participants, each of them having their own private key. In the case of an MPC wallet, segmented key data is distributed between the parties.

In this case, no device has access to the full version of the key. Using the MPC method to share a private key increases confidentiality and reduces the risk of hacking and loss.

How do MPC wallets work?

MPC wallets are based on two technologies:

• distributed key generation (DKG) - guarantees that the key will not be in full form at any time;
• threshold cryptography - protects information through encryption.

It is DKG that divides the private key into fragments that will be located by different parties and on different devices.

Threshold cryptography sets the minimum acceptable number of participants required to sign a transaction. This approach ensures that neither party can act independently.

When signing a message, each device participates in the confirmation process, but they do not completely recreate the key, but only exchange intermediate data.

Functionality of MPC wallets

One of the main functions of MPC-based wallets is distributed storage of private keys. Some companies call this approach “keyless.” For example, the access code to the MPC storage from the Binance crypto exchange is located on the owner’s device, in the cloud storage and on the company’s server.

Like any other cryptocurrency wallet, MPC-based tools allow you to buy and sell digital assets. The technology also saves transaction history and supports various cryptocurrencies, not limited to Bitcoin and Ethereum. In addition, a swap function can be built into the product.

MPC wallets can be integrated with various platforms such as exchanges or decentralized applications.

What cryptocurrencies can be stored in an MPC wallet?

The variety of cryptocurrencies supported depends on each individual MPC wallet. As a rule, the technology works with Bitcoin, Ethereum, USDT, USDC and other assets.

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