I would like to create this thread as a reference point for users asking about it, because not really that much people know what this means or does. Hopefully someone knowledgeable can answer the questions asked.
So for starters, somebody in the TG asked what the MPC wallet means or does and I replied with the following:
Well the easiest way to explain is to look at the name of the beast: multi party computation. This mean that multiple parties (users) can access 1 private key/account without holding the exact same key, their combined keys make the final private key. It enhances security, because you can set it up in a way that a transaction must have approval from multiple parties (treshold signatures) before execution is allowed. So in case of a hack, the hacker can’t do shit with 1 key if, for example, 5 approvals are needed from different devices/users. This is great for institutions because they don’t rely on the security of 1 single point of failure (the single private key as we currently know).
This will also help for their decentralized API keys, because now you can give those other parties different kinds of policies (e.g. only trade up to $x, disable withdrawals, etc.) through an API key. So you can have multiple users (or bots) access your account, with limited functionality (I’m not 100% sure on this API/MPC relationship so somebody please correct me if I’m wrong ).
Hope this helps
Please correct me if I’m wrong
Then the following questions were asked:
- What if 1 or more of those treshold signatures get lost? How will you be able to execute a TX anyway? Can you create or replace a new party? How will this work?
- The different parties don’t actually have to be physical devices, but can also be things like email, biometric identification, password, etc., right?
Thanks in advance for answering these.