The future of crypto security: Trustless MPC is the next big thing

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As the digital economy grows, the risk of asset theft, fraud and cyber attacks also increases. High-profile breaches, such as the WazirX attack where millions of dollars were stolen, have exposed vulnerabilities in existing security frameworks. To protect their assets, organizations are looking for solutions that go beyond traditional models of locking private keys. Enter reliable multi-party computing, a technology that eliminates single points of failure and increases the security of digital assets.

At its core, multiparty computation is a process in which multiple parties collaborate to create a signature without creating or revealing the entire private key. Unlike single-key systems that rely on a single party or organization to maintain the private key, MPC distributes the key generation and transaction signing process among several participants. This distribution provides unmatched security for digital assets by greatly reducing the risk of any party compromising the system.

Differences between MPC and traditional security models

Traditional security models rely on centralized control, where one entity holds the entire private key, or multisignature (multi-signature) wallets, where multiple parties hold individual keys. Both models have inherent security vulnerabilities. A single private key is susceptible to theft, hacking, or human error; Multi-signature wallets, on the other hand, can be costly (“gas”) because they require multiple signature verifications for each transaction.

In contrast, MPC can distribute the responsibility for key management and transaction approval among individuals. No entire private key is created, stored or shared; This eliminates the risk of a single point of failure. Instead, a signature is created through a collaborative process in which each party uses its individual key share to green flag the transaction. This system is more secure and cost-effective than multi-signature setups as only a single signature is created on-chain, minimizing fees.

The power of distributed key generation

One of the main advantages of MPC is distributed key generation. Unlike traditional models where a full private key is created and split, MPC creates key shares directly on individual devices. No single entity can ever possess the entire private key, greatly increasing security.

This feature addresses a critical issue: If one person or device is compromised in a centralized system, entire assets can be stolen. However, in an MPC system, multiple parties must come together to authorize a transaction; This creates a solid layer of security.

Threshold safety: An important protection

Another important feature of MPC is threshold security. In an MPC system, transactions can only be confirmed if a certain number of participants agree to sign. This model ensures that assets remain safe even if some important shares are compromised or lost. For example, if a company sets a threshold of five signatories, five ‘key stakeholders’ in the total group must approve a transaction before it can be finalised.

This feature has wide practical applications for businesses. It ensures that hackers cannot breach the system even if several devices or people are compromised. Key shares are stored in multiple locations, and the organization can adjust the signing threshold as needed to meet security or operational requirements.

A new era of MPC technology called Trusted MPC allows users of this technology to allocate more than one share per MPC signer, so that an organization can express its organizational chart in the allocation of key shares. For example, a senior manager may be assigned more signing authority than a department head, and that manager may have more authority than employees who report directly to him or her, etc.

How could MPC have prevented the WazirX breach?

WazirX security breach exposed flaws in centralized private key systems; Loss or theft of a single key can compromise an entire digital asset portfolio. If WazirX had used unreliable MPC technology, hackers would not have been able to obtain the private key because the full key would not be available. Even if hackers had gained access to some important shares, they would have had to compromise the security of multiple participants to breach the system, an almost impossible task given the distributed nature of MPC.

When implemented correctly, MPC ensures that no single entity has control over an organization’s digital assets and provides advanced levels of protection against insider threats or external attacks.

Proper implementation of trusted MPC also includes the concept of personal storage, where signers store individual sharing data on devices they physically possess. This means that key sharing data is never stored in the cloud, so third-party actors cannot intercept and misuse this information.

MPC and multi-signature wallets: Why is MPC the future?

While multi-signature (multisig) wallets are a popular solution for improving security, they fall short in many key areas when compared to MPC. In a multi-signature system, each party has a complete private key and the system requires more than one key to confirm a transaction. This adds a level of security but also increases the risk of compromise due to complexity, cost, and the fact that each participant has a full private key.

In contrast, trustless MPC allows the signing process to occur without ever generating a full private key. Instead of multiple signatures being verified by the blockchain (as in a multisig wallet), MPC generates a single signature from the collaborative process. This results in lower transaction costs as only one signature verification is required on-chain, regardless of how many participants are involved.

Efficiency and privacy benefits of MPC

One of the key benefits of reliable MPC is its efficiency. Since the system creates a single cryptographic signature, the blockchain only needs to verify one signature, saving on gas fees and increasing transaction speed.

Moreover, MPC improves privacy. Since each participant only has one share of the key, no one person can piece together the entire private key or learn about others’ key shares. This makes it much more difficult for malicious actors to compromise the system. Unlike multi-signature wallets, which expose multiple public keys, MPC ensures that the process remains completely private, further reducing the attack surface.

Why should businesses adopt reliable MPC?

With the increasing frequency and complexity of cyber attacks targeting digital assets, it is clear that organizations need to take stronger security measures. Trustless MPC provides a robust and flexible solution that surpasses traditional models in terms of security, efficiency and scalability.

Businesses that manage large volumes of digital assets can particularly benefit from MPC’s customizability. For example, key shares can be distributed across different roles within the organization to align with existing business structures. This means that executives, compliance officers, and other stakeholders may have different levels of signing authority; This ensures that high-level transactions require approval from the appropriate individuals.

Durability and flexibility in disaster recovery

Another important advantage of reliable MPC is its durability. In the event of a disaster, such as loss of key shares or compromise of certain devices, organizations can still recover their assets by pooling remaining key shares. This disaster recovery feature makes MPC systems highly adaptable and resilient to even the most severe attacks or failures.

For businesses that need the ability to dynamically adjust signing authority, MPC’s reshare functionality provides flexibility without compromising security. They can add or remove signers and change thresholds as an organization’s needs change, all while ensuring the highest level of asset protection.

The future of digital (and tokenized) asset security is trustworthy MPC

As digital assets continue to play an increasingly important role in the global economy, ensuring their security has never been more critical. Trusted multiparty computation represents the future of digital asset security; It offers an unparalleled level of protection by eliminating single points of failure, reducing costs and protecting privacy.

In a world where digital asset breaches can result in huge financial losses, companies need to embrace trustless MPC as the cornerstone of their security strategies. By distributing critical shares across multiple participants, requiring threshold approvals, and providing robust disaster recovery options, reliable MPC enables businesses to protect their assets from both internal and external threats.

The shift to trustless systems is inevitable, and organizations that now adopt this technology will be well positioned to protect their digital assets in an increasingly unstable cybersecurity environment. The question is not whether unreliable MPC will become the standard; The question is how soon businesses will adopt this to stay one step ahead.

Luke Plaster

Luke Plaster is the chief security architect at io.finnet. Prior to joining io.finnet, Luke held several senior positions at various companies, including the role of senior architect at Binance, where he led the development of Binance Chain. Luke wrote a popular open source library for MPC threshold signatures that his team used to build an internal digital asset cold storage system. He has also led teams for many popular DeFi protocols in the emerging web3 space. With over 15 years of experience in the technology industry, Luke has led the development and implementation of core business systems. He has worked on major projects in various areas of financial technology, including the development of exchange matching engines, digital asset custody systems, and payment gateways. Luke has also worked as an independent consultant, advising and guiding businesses looking to use blockchain solutions, and has been a key contributor to industry events. He shares his knowledge with the next generation of web3 entrepreneurs by interacting with a local educational institution.