What is an MPC Crypto Wallet? How Does It Work?
This article explains what an MPC crypto wallet looks like, how it works, and why it's good for beginners.
MPC, which stands for Multi-Party Computation, is a technique in cryptography that allows a secret to be secured by multiple parties, without revealing the secret to the parties themselves. It’s a way to solve a nearly impossible problem:
If you have a password and are prone to forgetting, how can your trusted social circle help you remember it without you giving away your password?
So, an MPC crypto wallet leverages this technology to help crypto beginners secure their crypto wallet easily, even without using a seed phrase or duplicating their private key!
What’s wrong with using seed phrases?
A traditional crypto wallet uses a seed phrase, which is an ordered list of typically 12 words or more. The seed phrase is like the wallet’s most basic form of security.
Wallet developers could add features that make it easy to unlock a wallet without typing down the seed phrase each time, such as using a password. However, if the password is lost or forgotten, the user of that traditional crypto wallet must resort to using the seed phrase in order to recover access.
While seed phrases themselves are generally secure, they do have vulnerabilities and issues.
- It’s easy to lose a seedphrase: misplace it, theft, fire, flooding etc.
- Even password managers have been associated with wallet breaches, e.g. users affected by the lastpass hack.
- If someone comes across your seedphrase, they can drain your wallet. There are no additional measures in place to ensure you are the true owner.
- Storing a full private key on a device is a security risk, e.g. an attacker could potentially access a full seed via malware or compromised apps.
In this guide, we’ll look at what an MPC wallet looks like and how it addresses these issues. It’s good to note that an MPC crypto wallet is also referred to as a social recovery wallet, or social self-custody wallet.
The main idea is the same — having a user’s trusted inner circle become “guardians” of their crypto wallet, so they can support the user when they lose access to the wallet.
What does an MPC crypto wallet look like?
An MPC crypto wallet does everything that a traditional crypto wallet does. You can receive crypto assets, and send them to any wallet address or crypto applications, given that you’ve unlocked the wallet. What sets MPC wallets apart from traditional wallets is the recovery process.
An MPC wallet like EC Wallet doesn’t give you any seed phrase. When you create an EC Wallet, two key shares are generated. One share is stored securely on your device. The other share is stored securely by Easy Crypto, which is connected to your Easy Crypto account.
To be extra secure, your key share can be backed up using two strategies: cloud backup and social recovery (we’ll discuss more about it in detail in the next few sections).
To send any crypto and move funds, two key shares are needed. An individual key share on its own is meaningless. Easy Cryto cannot move your funds with only one of your wallet’s key share. This makes EC Wallet 100% self-custodial, and is the reason why MPC wallets are innovative.
Upgrading your wallet security
As we mentioned, when you create an EC Wallet, one of the two key shares is stored on your device. Of course, two questions naturally arise:
- What if my device gets lost, stolen, or damaged?
- What if I want to switch to a different mobile device?
Cloud backup is the answer to these questions. If you have, let’s say, a Google account, with just a few taps your key share is backed up and gets connected with your account. Whenever you switch to a different mobile device and log into your account, EC Wallet will recognise that it’s you. You’ll then gain access to your funds on the new device.
Want to be completely self-custodial, and not have to rely on any other company (apart from Easy Crypto) to enhance your wallet security? You can use the social recovery strategy.
Setting up social recovery
EC Wallet offers an easy-to-setup social recovery scheme. All you need to do is provide the emails of three people whom you trust to be your wallet guardians.
Each guardian will receive a shard of your key share. Like the other key share that Easy Crypto stores for you, a shard is meaningless on their own. However, your wallet guardians can help you reconstruct your key share and help you regain access to your wallet, in case you lose your PIN or you need to switch to a different mobile device.
Do you know the clever part? The social recovery scheme is very flexible. You don’t need all three guardians to unlock the wallet for you. Any two of the three guardians can do.
Important to note: Wallet guardians, even if they can collude against you by sharing each other’s shards, cannot move your funds. This is because the shards need to be reconstructed in the app itself, and only you have access to your own account.
You choose who to trust
As cryptocurrency technology evolves, so does the decentralisation ethos offered by the technology. When Bitcoin was invented, the vision of absolute ownership was realised, and people can now truly own something digital, using a private key that only they know.
However, storing private keys proves to be a hassle. More than 20% of the Bitcoin supply was lost due to misplaced, lost, or stolen private keys.
The introduction of the BIP39 seed phrase system slightly improves the user experience of storing private keys, but this is also not infallible.
This resulted in crypto users choosing to store crypto on centralised exchanges. There were simply no better and more convenient choices in the market.
Nowadays, we have the third option — choosing our own custodial system, based on trusting a few individuals, rather than an entire company.
This is the ethos of MPC wallets, also known as social self-custody wallets. In time, this ethos will indeed become popular, and as a result, a new generation of crypto wallets will emerge to better serve humanity — combining both security and convenience, while maintaining the original ethos of decentralisation.
Easy Crypto Wallet
As mentioned above, social self-custody wallets are the next generation of crypto storage solution. Our team at Easy Crypto are striving to streamline and simplify the crypto experience for all users.
And with that we’re introducing the Easy Crypto Wallet, an MPC self-custody wallet that is locally-designed with social recovery features and cloud backups.
- The EC Wallet is a non-custodial wallet with recovery features built-in, via Social Recovery and encrypted cloud-based backups.
- Featuring the latest MPC (Multi-Party Computation) signing for authenticating transactions.
- Manage multiple wallets and addresses in one simple app. Create accounts and individual addresses to enhance your on-chain privacy and suit your needs.
As an MPC crypto wallet, the Easy Crypto wallet generates 2 key shares: one is stored on the user’s device, and the other is stored securely by Easy Crypto. Both shares are needed to confirm a transaction.
The user can backup their keyshare. Either through encrypted cloud backup (iCloud or Google Drive), rest assured this is highly secure. Even if the cloud account and encryption were hypothetically breached, the attacker would only hold one of 2 required keyshares.
Additionally, another layer of recovery is the social recovery. Where we break the user’s keyshare into a number of shards. E.g. 3 guardians would only require 2 shards to recover the wallet. The sharding ensures that none of our guardians holds the full keyshare at anytime.
Combining the best of both worlds – the Easy Crypto Wallet gives you the autonomy and full control of your assets as a self-custody wallet, while incorporating the protection, security, and privacy of cold wallets.
Available on both iOS and Android devices.
Get Started: Download the Easy Crypto Wallet today!
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Disclaimer: Information is current as at the date of publication. This is general information only and is not intended to be advice. Crypto is volatile, carries risk and the value can go up and down. Past performance is not an indicator of future returns. Please do your own research.
Last updated November 24, 2023