What is an MPC Wallet in Crypto?
4 Apr 2023
4 Apr 2023
In Crypto Wallets 101 we talked about the problems with first-generation crypto wallets and why they are a major barrier to virtual currency adoption. The good news is that there's a new wallet technology available – Multi-Computational Wallets (MPCs) – that solves many of these challenges. So, what is an MPC wallet?
In this article, we'll talk about how MPCs provide advanced protection from the wallet vulnerabilities of today. We'll also dive deep into how MPC wallets work and why they are the future of crypto adoption.
Previously we discussed how traditional crypto wallets are almost completely reliant on an extended passphrase (up to 24 words long!) known as a ‘mnemonic’. This seed phrase is used to generate the cryptographic keys required to make and receive payments using cryptocurrency.
But perhaps more importantly, the passphrase is the only proof you have that you own the contents of the crypto wallet. If your passphrase is lost or stolen (or forgotten), you lose access to everything in the wallet forever.
Seed phrases have historically been problematic, and not just for users who may lose their keys or forget to back them up. They also represent an arena for hackers to gain access to your precious crypto. MPC wallets like Gridlock go a long way to eliminate the risks of hacks and crypto wallet compromises.
MPC wallets like Gridlock take a different approach. Although they still rely on a single encryption key, it never exists completely in one place. Instead, the key is split up into ‘shards’, with each being assigned to a ‘Guardian’ for protection.
In order to make a transaction, the shards have to be obtained from the Guardians and assembled to build the complete key. The process is quick, easy, and automated for the ultimate in convenience for such a secure wallet.
Only after the key reassembles can the transaction be authorized. And this is why it is called a Multi-Party Computation wallet – you need multiple parties to approve each transaction, dramatically reducing the risk of your crypto and NFT assets being compromised.
With the Gridlock crypto wallet, you have five Guardians that you choose who will look after your shards, also known as key shares. Each shard is virtually distributed for secure storage. You typically hold one key share, Gridlock stores two, and you can select other people, devices, or Partner Guardians, to look after the rest. You have control over who makes up your security network with Gridlock's MPC wallet.
Whenever you make a transaction that requires a secure verification, the wallet contacts your Guardians automatically to reassemble the key to approve the transaction. It's easy from the viewpoint of the user, but it actually involves complicated cryptography.
Fortunately, the whole process of transaction signing by your distributed security network is automated and can be completed in about one second.
With Gridlock, an operation can be completed with just three shards preserving both security and convenience. Three out of five key shares is the "threshold", as Gridlock utilizes Threshold Signatures in combination with the MPC wallet tech. The 3 key share holders represent the threshold requirement for transaction signing.
You can build up a distributed network of Social Guardians and Partner Guardians to increase the security of your MPC wallet. With Gridlock, you always have a say in your distributed network security.
There are several benefits to the MPC approach:
All of these benefits mean that crypto and NFT holders can have the best of both worlds: cold wallet security with hot wallet functionality!
In our previous article, we talked about the trade-offs between maximum security using cold wallets and the optimized convenience of using hot wallets.
By virtually breaking your private encryption key into shards and storing them remotely, an MPC wallet behaves like cold storage. But because the key shares can be reassembled remotely by the wallet, you can also make ‘hot’ online transactions with ease.
The Gridlock wallet is designed to be simple and intuitive, making it easy for anyone to get started. You get all the benefits of Multi-Party Computation without any of the headaches and wallet vulnerabilities present in traditional crypto wallets.
With advanced security for your precious cryptocurrencies and NFTs, Gridlock's MPC wallet is backed by a team dedicated to protecting your digital assets. Their commitment to security is closely followed by the goal of making an MPC cryptographic wallet easy and fun to use. Their vision is to bring to the mainstream cutting-edge wallet security with a sleek user interface and streamlined performance
So, what are you waiting for? Download Gridlock today and start breathing easy with an MPC wallet that puts the security of your crypto assets first!
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Written by Mason Winsed
Mason Winsed simplifies blockchain for the people. With a comp-sci background and a passion for crypto safety, he's your go-to for straight-forward crypto wisdom. In his off time, he's coding or gaming. Join Mason for a no-nonsense crypto talk.