Multi-Party Computation (MPC) Wallets: A Beginner's Guide

by Chaindustry 2nd November, 2023
4 mins read

It's all about MPC (Multi-Party Computation) wallets and how they're transforming the landscape of cryptocurrency security. Explore the history, benefits, and drawbacks of MPC wallets and understand how they differ from other storage methods. Dive into the world of enhanced privacy and security in the digital asset realm with this informative article.


In a world where safeguarding digital assets is paramount, Multi-Party Computation (MPC) wallets have risen as a novel and secure storage solution. This blog post will unravel the concept of MPC wallets, shedding light on their functionality, benefits, and drawbacks.

Understanding Multi-Party Computation (MPC)

MPC, or Secure MPC (SMPC), allows individuals to collaborate on a secret without revealing it to one another. In the age of the internet, where privacy is hard to maintain, MPC comes to the rescue. Imagine three employees in a Web3 startup wanting to calculate their average salary without disclosing their incomes. MPC protocols use additive secret sharing to divide the secret among participants, allowing them to compute the average without direct communication. MPC thrives on two vital principles: preserving privacy and obtaining accurate results, even if some participants violate the rules.

A Glimpse into MPC's History

MPC is a cryptographic subfield that originated in the 1970s, with practical applications emerging in the 1980s. Unlike traditional cryptography, which safeguards information from external threats, MPC employs cryptography to ensure data privacy. Today, MPC technology finds use in various scenarios, including securing digital wallets in MPC wallets and maintaining data privacy in digital auctions.

Demystifying the MPC Wallet

As the name suggests, an MPC wallet leverages multi-party computation technology to heighten the security of your digital assets, including cryptocurrencies. It divides a wallet's private key among multiple parties, fortifying privacy and against hacking, breaches, and losses.

But how does it differ from multisig wallets, which also aim to enhance security? Multisig wallets require multiple private keys for transaction authentication, while MPC wallets split a single private key among several parties. The distinction lies in the technical nuances, making MPC wallets more versatile and easier to implement.

The Advantages of MPC Wallets vs. Other Crypto Wallets

Within crypto wallets, custodial wallets manage assets and private keys, while non-custodial wallets empower users to control their keys. Non-custodial wallets are often deemed more secure, but they require technical expertise. MPC wallets aim to bridge this gap, offering enhanced security with added convenience. Their benefits include the following:

Heightened Privacy: Data encryption at every step without reliance on third parties.

Enhanced Security: Eliminating single points of failure by distributing the secret key among multiple parties and locations.

Greater Convenience: Online asset storage, minimizing the need for cold storage.

The Drawbacks of MPC Wallets While MPC wallets offer heightened security, they come with certain trade-offs:

Slower Performance: Enhanced security can lead to slower operations, especially during private key and secret share generation.

Increased Costs: Sharing and computing data among multiple parties and networks can escalate costs.

MPC Wallets in Action

MPC technology is the preferred choice for top-tier security solutions in large institutions. Leading financial companies have adopted MPC to safeguard assets from internal and external threats.


In summary, Multi-Party Computation (MPC) wallets have emerged as a sophisticated solution for securing and preserving the privacy of digital assets. Despite some limitations, their advantages in terms of enhanced security, privacy, and reduced reliance on conventional storage methods make them an increasingly popular choice. As the digital asset landscape continues to evolve, MPC wallets are set to play a pivotal role in ensuring the security of assets and information in the digital realm.

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