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How Multi-Party Computation Secures your Assets?

The technique of secure multi-party computating technology (MPC/SMPC), which is also known as secure multiparty computation, is a well-known cryptographic approach that is utilized to safeguard digital assets or protect information cryptographically. The technology has been leveraged in various sectors to secure information by using several MPC theories and algorithms. With the increasing popularity of blockchain-based financial solutions (DeFi), the interest in MPC technology has surged, mainly due to its application in safeguarding funds in crypto wallets.

In essence, MPC technology enables the creation of programmatic solutions that secure “secrets” by dividing them into several parts, such that no participant has knowledge of the underlying “truth.” This ensures that no single participant can disclose or reconstruct the secret information.

This article will delve into the concept of secure multi-party computation, providing a detailed explanation of how it works.

What is Multi-party computation?

Multi-party computation is a cryptographic technique that enables multiple parties to participate in computing a specific result without disclosing the content or nature of their inputs or any other secret information. Each party holds fragments of private data that are combined to compute the result.

In simpler terms, MPC brings together separate entities that hold different pieces of information that can reveal a secret, sign a message, or approve a transaction when combined. This is achieved without revealing any information on the individual’s possession.

It’s essential to note that in MPC, the data split across multiple participants does not represent the secret if combined. Instead, it serves as inputs for the desired computation. Every valid MPC protocol must meet two requirements:

  • The protocol must prevent dishonest participants from forcing honest parties to disclose their confidential information or influence the result by revealing their secret information or disregarding the rules during computation.
  • No one can deduce each party’s secret information from the protocol’s execution. Therefore, the result of the computation provides no hint about the private information in the participants’ possession.

The Millionaire’s Problem is a classic example that illustrates the concept of MPC. Suppose three employees of a company want to determine the employee with the highest salary without disclosing their actual salaries. The objective of MPC is to create a protocol where the three employees can still learn who has the highest salary without revealing any salary information and without relying on a trusted third party.

If the three employees had a trusted third party, they could each tell the third party their salary and find out which of them earns the most without ever disclosing the private information. The goal of MPC is to design a protocol where the three employees can exchange messages with each other to determine the employee with the highest salary without revealing any salary information and without relying on a trusted third party.

The two fundamental properties that a multi-party computation protocol must ensure are accuracy and privacy. Accuracy means that the output produced by an algorithm is correct, while privacy ensures that the secret input data held by a party will not leak to the other parties.

How does MPC work to protect your digital assets?

To utilize digital assets, a public key and a private key are required, with the private key being crucial to securely holding and transferring the asset. If the private key is compromised, the assets can be transferred to another wallet without the owner’s consent. Therefore, keeping the private key safe is essential to ensure digital asset security. The primary options for securely storing private keys include hot and cold storage.

Hot storage involves holding the private key online, while cold storage involves holding it offline, such as on a hardware wallet. While a combination of these storage options may be sufficient for regular crypto users, it may not meet the security requirements of institutional investors. This concern has led to the emergence of more secure solutions such as MPC.

Institutional investors can use MPC to replace individual private keys to sign transactions. A multi-party computation protocol divides the signing process among multiple computers. Each computer holds a piece of private data representing a share of the private key, and they work together to sign transactions in a distributed manner. This mitigates the risk of a single point of failure as private keys are not stored in a single location.

MPC is also operationally flexible and efficient compared to traditional multisig technology, which is protocol-specific. Additionally, MPC not only provides a more secure option for institutional digital asset storage but also for digital asset transfers. As the digital asset market continues to develop and grow, there is a need for a security tool that enables fast transfers and advanced business strategies, which MPC can provide.