What Is Multi-Party Computation Technology?
Invented by computer scientist Andrew Yao almost 40 years ago, multi-party computation (MPC) technology has been in development for the last few decades and has only entered the digital asset space a few years ago. It has come a long way from intellectual curiosity to one of the primary technologies used by wallet providers and custodians to secure crypto assets.
What is multi-party computation?
MPC is a cryptography tool that allows multiple parties – each holding their own private data – to evaluate a computation without revealing any of the private data held by each party. In MPC, a given number of participants each holds a piece of private data. Together, the participants can compute the value of a public function on that private data while keeping their own piece of data secret.
A classic example used to explain MPC is The Millionaire’s Problem.
Let’s imagine three employees of a company want to know who has the highest salary without disclosing their actual salary. The goal of MPC is to create a protocol where, by exchanging messages only with each other, the three employees can still learn who has the highest salary without revealing who makes what and without relying on an external third party.
If the three employees had a trusted third party, they could each tell that person their salary and find out which of them makes the most without ever learning the private information. The aim of MPC is to design a protocol where, by exchanging messages only with each other, the three employees can still know who has the highest salary without revealing who makes what and without relying on an external third party. The two basic properties that a multi-party computation protocol must ensure are accuracy and privacy:
Accuracy: the output produced by an algorithm is correct.
Privacy: the secret input data that a party holds would not leak to the other parties.
How does MPC work to protect your digital assets?
A public key and a private key are needed to utilize your digital assets. Your ability to safely hold and transfer the asset is only guaranteed if the private key is safe. If your private key falls into someone else’s hands, they can transfer the assets to their own wallet. Therefore, keeping your private keys safe is crucial to maintaining digital asset security. There are a few primary options for securely storing private keys. These options tend to fall into either hot or cold storage:
Hot Storage – Private key held online
Cold Storage – Private key held offline (e.g., stored on a hardware wallet)
While a combination of these storage options may be enough for a regular crypto user, they might not meet the security needs of an institutional investor. This concern led to the rise of more secure solutions, such as MPC. When it comes to digital assets, institutional investors can use MPC to replace individual private keys to sign transactions. A multi-party computation protocol distributes the signing process between multiple computers.
Each computer has a piece of private data representing a share of the private key, and they work together to sign transactions in a distributed way. With MPC, private keys no longer need to be stored in one single place, mitigating the risk of a single point of failure. MPC is also more operationally flexible and efficient compared to traditional multisig technology which is protocol specific. Moreover, MPC is not only a more secure option for institutional digital asset storage but digital asset transfers as well. As the digital asset market has developed and grown, so has the need for a security tool that enables fast transfers and advanced business strategies.
Securing your assets with Ceffu
Ceffu is a compliant, institutional-grade custody platform offering custody and liquidity solutions that are ISO 27001 & 27701 certified and SOC Type 1 & Type 2 attested. Its multi-party computation (MPC) technology, combined with a customizable multi-approval scheme, provides bespoke solutions allowing institutional clients to safely store and manage their digital assets through its insured, segregated cold storage solution, Qualified Wallet. Institutions also benefit from Ceffu’s secure gateway to a wide range of liquidity products within the Binance ecosystem as Binance’s institutional custody partner.
Contact us to start securing your institutional assets today.