Cryptocurrencies have already become one of the finest methods of a transaction and an investment source. The point of transaction begins from a private key stored in the digital wallet. It’s the security of this private key that matters the most and many hackers have found the vulnerable side to get access to this key.
Experts in the industry have been trying harder to come up with new solutions to make the private key more secure. Multi-party computation (MPC) is the hottest solution that has been implemented successfully by the ZenGo wallet.
Security has new definitions with the introduction of MPC, we’ll learn about MPC and see how it has become a keyless solution to secure cryptocurrencies. Also, we’ll learn the benefits of MPC over multi-signature wallets and how we can bypass the need for a trusted third-party solution.
MPC has been in the development stage since the 1970s. Multi-channel computation also known as MPC is one of the best encryption models currently utilized in the crypto industry by KZen and others.
MPC generates the private key in a different way, multiple computers are used to make fragments of a private key. Remember, the non-testing computers are not creating multiple keys instead they are generating multiple parts of a private key.
Just like the multi-signature model, where the M-of-N keys concept is used to make a transaction, MPC uses M-of-N parts of a key concept. We’ll talk about the multi-signature model in the latter part of this article.
The private key is thus not generated in a single node which makes hackers difficult to find the part where the signature of the transaction is made.
You may think it this way, the connected nodes would have a known connection about the other parts or values of the key. If your thoughts went this way or not, let me assure you one thing, what happens in a system stays in the system itself!
Each system conducts the computation with its own unique fragments of the key. Collectively, they all provide a single result, but no node knows the value of the key other than its own computed value. Interesting, isn’t it?
A private key to execute a transaction is thus a result of the collective efforts of all the nodes which makes the transaction more secure.
Thus, one can call MPC achieving a keyless wallet with great security.
Benefits of MPC over multi-signature solutions
To know the benefits, you must have a brief knowledge of the multi-sig model. The Multi-sig model uses distinct signatures of different private keys to secure a wallet and complete a transaction.
To be precise, it has multiple keys distributed among the nodes. To complete a transaction all these keys need to work together just like a mutual locker where the account owners need to use their keys together to open it.
It sounds great, isn’t it? Then how is MPC more beneficial than a multi-sig model? Let’s see the benefits.
- High security as finding the signature of the transaction is difficult for hackers
- No single point of failure
- Only one private key used, but with distinct nodes that have different parts of the key
- The nodes don’t share the value with each other which increases the privacy of data
- No assembling of different keys to a single point
- Bypass the need for a trusted third-party
Have you heard about Engima’s computation model which used MPC to make data privacy more valuable? MPC, as discussed above, follows a high privacy agenda by keeping the connected nodes from getting the value of the complete structure of a key.
A collective form of security is thus maintained offering the best way of encryption model. Like Bitcoin, an MPC wallet doesn’t rely on an external or third party. The combined effort of blockchain technology with wallet solution validates data to the connected nodes.
The consensus algorithm brings in the element of trust in the validation process by keeping the reliability factor high among the connected nodes. No third-party integration is needed to complete a transaction by keeping the value of privacy as well as security.
However, there are fewer concerns that exist with the MPC model as it has some accountability issues. Never have any technology found its saturation point. Saturation is a limit at which a system cannot extend the abilities after its achievement of this stage. If this point is achieved on the front, then there is no future in any technological growth.
MPC will find its ways to make the process more accountable in the coming days.
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