The crypto space has been growing immensely since Bitcoin’s inception in 2009, and it is not without problems. Apart from the (apparently) overly technical nature of blockchains to the general public, the safety of invested money has been a problem encountered by the space. Despite efforts from centralized entities (such as CEXs) and multi-sig wallets to enhance crypto security, there have been instances of hacks and misplaced private keys, putting investors’ crypto savings in danger. Also, being overly centralized (in the case of exchange savings) and overly decentralized (in the case of personal crypto wallets) has not been helpful to investors in many ways despite promising to be so.
Is there a solution to this problem? A process called MPC wallet development says so, as it uses one of the long-known elements in the cryptography space – Multi-Party Computation. If you are thinking about how Web3 and a classic cryptographical concept can work together, this comprehensive guide can help you to get a clear understanding of how it all happens. These applications might help the Web3 space not to lose cryptocurrencies permanently, unlike the US$100 billion worth of Bitcoin lost forever due to wallet mismanagement and crypto exchange platform exploits.
What is an MPC Wallet?
An MPC (Multi-Party Computation) wallet is a crypto wallet application that uses a combination of advanced cryptography and distributed computing technologies to safeguard a wallet’s private keys. For those who are new to the crypto space, the private key in a crypto wallet helps to process transactions (similar to a credit card PIN), while the public key is the wallet’s address (similar to the bank account number).
Developing an MPC wallet can be advantageous as it depends on multiple parties to hold its private keys as “shares” who do not need to reveal their keys to each other. For a crypto transaction to be processed from the wallet, a certain number of shares should be combined.
| Developing Your MPC Wallet Can be Vital for the Web3 Space’s Growth! Don’t Miss Out!
Technological Aspects of an MPC Wallet
Similar to any other Web3 application, blockchains play a crucial role in MPC wallet development. Apart from being the bases for crypto transactions, they also help in processing them by assisting other technologies. They helped in creating new-age cryptographical concepts such as threshold signatures and Multi-Party Computation, which have a huge role in crypto wallet apps.
Threshold Signature Scheme (TSS)
Threshold Signatures play a major part while developing your MPC wallet. TSS, the scheme behind these signatures, helps to generate a single digital signature from multiple signers before processing a transaction. This is where Multi-Party Computation comes into play, as it helps to evaluate the private keys digitally in a distributed manner.
Multi-Party Computation (MPC)
Multi-Party Computation (MPC) refers to the process of using inputs from different people without revealing them to compute the output. In the case of a wallet application, inputs correspond to shares of the private key, and the output corresponds to the ultimate private key to process a transaction. The following elements are vital for any MPC process:
- Correctness: The output produced by combining the key shares is correct, as expected.
- Privacy: The secret key share of a party is not revealed to other participating parties.
Workflow in an MPC Wallet
- Key Generation: The first step in processing a transaction in an MPC wallet begins with key generation. Here the public and private keys for the wallet application are created. While only one public key is generated, the number of private keys (or shares) generated depends on how many parties are involved. The process ensures that correctness and privacy are maintained as the public key is a function of the key shares, and individual key shares are not revealed to other parties.
- Signing: In this step, the signatures are generated by inputting the key shares obtained from the last step. There also will be the public input known to all parties involved, which will be the message to be sent (in the case of a wallet, the transaction amount). The output of the process will be an irreversible digital signature where the transaction gets added to the blockchain.
- Verification: Anyone who knows the wallet’s public key can verify and validate the transaction on the blockchain. Through this, one can ensure that the transaction is indeed authenticated without doubts.
- Accessing Funds: As for accessing funds received in the MPC wallet, it is essential to satisfy all the preset conditions established during the application setup process. Still, even if one of the parties involved in an MPC wallet loses their key share, access to crypto holdings is not blocked off, bringing a revolutionary change in crypto storage.
How Does MPC Wallet Development Benefit the Web3 Space?
- Higher Security: MPC wallet development offers a higher degree of security to one’s crypto holdings against threats by distributing secret shares of the private key to numerous parties.
- Ease of Access: Using an MPC wallet eases the workload for businesses by allowing multiple parties involved to access, transfer, and manage crypto assets.
- High Adaptability: MPC wallet applications can be integrated into blockchain protocols, easing access to new networks and crypto asset types.
- Maximum Privacy: Such a wallet can offer utmost privacy as individual inputs (key shares in this case) cannot be derived from the output. Also, with the involvement of multiple parties, gaining total control over the wallet becomes impossible for hackers.
- Lesser Gas Costs: Since the number of transactions matters when calculating the blockchain gas fees (irrespective of the number of signers involved), costs will be the same as that of a standard blockchain transaction.
- User-friendliness: MPC wallets are generally user-friendly (even for those new to cryptos) due to their key management processes. They also enable users to trade non-fungible tokens (NFTs) in a similar fashion.
The Process of Building an MPC Wallet
The process of developing and launching an MPC wallet is presented in the following steps:
- Initial Research: Building an MPC wallet begins with researching and analyzing the application. Elements such as feasibility, competition, market needs, technology, features, and working flow are determined and included in the official documentation.
- Application Design: Our MPC wallet development campaign moves to design the application’s user-end elements. Make sure to create visually-appealing user interfaces (UI) that offer seamless user experience (UX) using appropriate design practices. It is encouraged to develop a prototype first to save resources.
- Application Development: As part of building an MPC wallet, we proceed with developing the wallet application by integrating it into the blockchain(s) you desire. Smart contracts that define the wallet’s special functionality and Threshold Signature Scheme (TSS) are coded.
- Quality Assurance Testing: Next, the campaign advances to the testing stage, where various test cases are deployed on the MPC wallet to find errors that will be resolved promptly. The process is repeated until the application is free of most errors. Alpha and Beta Testing, with the public’s involvement, can help speed up the process.
- Launch and Maintenance: The MPC wallet application is finally launched for public use after extensive promotions. Adequate care must be taken to ensure the platform is maintained and upgraded to stay relevant to the newest Web3 trends.
Applications of MPC Wallets in Web3
- Shared Wallet Accounts: Organizations can make use of MPC wallets to securely store and transact assets with access to multiple parties without revealing their private keys.
- Decentralized Finance Apps: Decentralized Finance (DeFi) apps can use these wallets to enable secure and private financial transactions, preserving the principles of P2P transactions.
- Transactions of Sensitive Data: MPC wallets can come in handy to transact sensitive information such as financial, identity, and medical records.
- Safe Voting: These platforms can be used for voting processes safely, making voters not need to reveal their votes while giving the outcome of the election.
Why Use MPC Wallet for Your New Business?
Launching an MPC wallet is sensible from a business perspective now, as the Web3 community has realized the need for truly safe and secure transactions. With multiple trustless parties participating in processing transactions in the case of an MPC wallet, individuals and businesses can ensure the enhanced safety of their assets from malicious actors.
While making use of the MPC wallet for your business or as your venture depends on your needs, both options are left wide open, as the business model is still evolving. It could be the right time for you to build a business that depends on an MPC wallet that functions seamlessly on multiple blockchain networks.
At Blockchain App Factory, we excel in creating MPC wallet applications for clients. We also offer clients with other Web3 business applications the opportunity to integrate these wallets for better functionality. We create MPC wallet applications that consist of the following elements:
- Intuitive User Experience
- Extensive dApp Connectivity
- High-end Security
- Native User-end Features
- User-end Interface Design
- Anytime Customer Support
Create an MPC wallet today with our experts to begin a Web3 venture for the next generation! Contact our professionals to discuss the prospects for your new business!