MPC Wallets: Your Additional Security Measure

    The security of crypto funds is the most sought-after property of any blockchain-based wallet. The increase in the number of crypto hacks and NFT phishing scams makes one wonder if it is worth placing their funds in unreliable storage. However, many crypto wallets are trying to make security enhancements to provide users with the ultimate security measures. Some crypto wallets are now relying on security-based technologies to add an extra layer of safety. One prominent example is the MPC wallets. Let’s see what MPC is all about. 

    What is Multi-Party Computation (MPC)? 

    MPC is a cryptography protocol that aims at creating ways for multiple parties to jointly compute a function without revealing their inputs to each other. This technique is best implemented when different parties want to compute one single function, but don’t want to reveal any private information or data while doing so. 

    For instance, let’s say there are three employees who want to calculate their average monthly food delivery bill. Each person wants to see the average bill and how much his share of the bill is without exposing how much he is paying for food during the month. This is where protocols like MPC help. MPC can help calculate the average monthly food delivery bill without revealing any sensitive information, and without resorting to third-party platforms. 

    How is this possible? Well, MPC protocols encrypt each party’s secret input and perform calculations on encrypted values to deduct a desired function. The process includes multiple rounds of communication between parties exchanging encrypted messages. 


    The MPC protocol is used to ensure security against attacks while being efficient in regard to its computational resources needed. 

    What Are MPC Wallets?

    MPC wallets are crypto-based wallets that are built using multi-party communication technology. In an MPC wallet, the users’ private keys are split into encrypted segments known as “shares” and sent to different parties. Thus, none of the parties have full knowledge of what the entire private key is since each party only holds a fragment. 

    This method of encryption benefits users who do not wish for a third party to know and control their private keys. In addition, MPC wallets help protect wallets against attacks that trick users into comprising their private keys. Because the private keys aren’t stored in one single place with a single point of failure, the hacker will find it challenging since they’ll have to steal from multiple places using different ways. 

    MPC Work

    How Do MPC Wallets Work?

    We won’t get into the details of how MPC wallets work since they involve complex mathematical calculations and communication between parties. However, we can scratch the surface of how an MPC wallet works to have a better understanding. 

    As discussed before, the MPC protocol takes a user’s private key and splits it into multiple fragments or “shares” and distributes them to what is known as MPC members. Each member gets an encrypted segment of the user’s private key and has the right to participate in the key signature for transactions

    Each member communicates directly with the MPC server using a specific MPC client (software). The MPC server delivers the data needed for MPC computations back to members. 

    MPC Protocol

    This is how transactions get signed using an MPC wallet. It’s just a bunch of communication back and forth between members and the MPC server until the desired signature is done. 

    Are MPC Wallets the Same as MultiSig? 

    MPC and Multisig wallets are two different things. It is important to differentiate between the two since both require multiple-party control. 

    Multisig wallets use a digital signature that requires more than one private key to authenticate a transaction. However, MPC wallets divide one private key into multiple shares. 

    Pros and Cons of MPC Wallets 

    Using MPC wallets have many advantages, most prominently the high security of digital assets by eliminating wallets’ single point of failure. However, there are also some drawbacks to using this protocol. So, let’s have a look at the advantages and disadvantages of  MPC wallets. 


    • Reliability: MPC wallets are reliable since they ensure that users’ assets are still accessible even if one party becomes unavailable. 
    • Data Privacy: Data is encrypted both at rest and in transit which means that no personal information regarding the private keys is shared or exposed. 
    • High Security: Since users’ private keys aren’t stored in one place, there is no single point of failure. This gives hackers an extra challenge trying to attack a wallet. 
    • Free of Third Parties: Users don’t have to trust a third-party platform with their private keys anymore. 


    • Complex: One of the major drawbacks of MPC wallets is their complexity, especially for non-experts in cryptography. MPC wallets can be very challenging to set up for the average person.
    • Slow: MPC wallets require additional computational resources to operate, which might make them slower than other wallets. 

    MPC Wallets Examples

    There are several platforms that offer crypto wallets that operate using the MPC protocol. 

    • ZenGo: is a Web3 platform that offers self-custodial crypto wallets with no private key vulnerability. The platform first launched back in 2019 as the first consumer-facing MPC wallet and now has over 700K global customers. 
    • Coinbase: The popular exchange platform’s MPC wallet can handle cryptographic signing for almost all blockchains. In addition, since there is zero overhead, users don’t have to pay for gas transactions. Recently, Coinbase launched a wallet API as a service that is also based on the MPC protocol. 

    Do You Really Need One? 

    The answer is: it depends. MPC wallets can be less efficient than other wallets because of their complexity. Many users prefer to avoid technical issues when it comes to setting up their wallets. However, it is clear that MPC wallets are far superior security-wise. Here, it depends on the priority of the user. Some users might prefer security over a simple setup, and vice versa.

    It’s important to also know the types of private key storage methods used across different blockchains. There are: 

    • Cold Storage: Private key is stored offline.
    • Hot Storage: Private key is stored online.
    • Hardware Wallets: Private key is stored on a physical device. 

    However, the above methods all have risks related to losing one’s private keys due to human error or private key-targeted attacks. 

    It is vital for one to do their own research before settling on a specific wallet method. We might see further private key enhancements security-wise as te blockchain witnesses technological advancements.


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