As the digital economy grows, so does the risk of asset theft, fraud, and cyberattacks. High-profile breaches—like the WazirX hack in which millions of dollars were stolen—have exposed the vulnerabilities in existing security frameworks. To protect their assets, organizations are looking for solutions that go beyond traditional models of locking up private keys. Enter trustless multi-party computation—a technology that eliminates single points of failure and enhances the security of digital assets.

At its core, multi-party computation is a process where multiple parties collaborate to generate a signature without ever creating or exposing the full private key. Unlike single-key systems, which rely on a single party or entity to protect the private key, MPC distributes the process of key generation and transaction signing among several participants. This distribution greatly reduces the risk of any one party being able to compromise the system, providing unmatched security for digital assets.

Differences between MPC and traditional security models

Traditional security models rely on centralized control, where one entity holds the full private key, or multi-signature (multisig) wallets, where multiple parties have individual keys. Both models have inherent vulnerabilities. A single private key is susceptible to theft, hacking, or human error, while multisig wallets can be costly (in ‘gas’), as they require multiple signature verifications for each transaction.

In contrast, MPC can distribute the responsibility for key management and transaction approval across people. No full private key is ever generated, stored, or shared, eliminating the risk of a single point of failure. Instead, a signature is generated through a collaborative process, where each party uses their individual key share to jointly green-flag the transaction. This system is more secure and cost-effective than multisig setups, as only one signature is created on-chain, minimizing fees.

The power of distributed key generation

One of the core advantages of MPC is distributed key generation. Unlike traditional models, where a complete private key is generated and then divided, MPC directly generates key shares on individual devices. No single entity ever possesses the full private key at any point, greatly improving security.

This feature addresses a critical issue: in a centralized system if one person or device is compromised, the entire set of assets can be stolen. However, in an MPC system, multiple parties must come together to authorize a transaction, creating a robust layer of security.

Threshold security: A crucial safeguard

Another essential feature of MPC is threshold security. In an MPC system, transactions can only be approved if a threshold number of participants agree to sign. This model ensures that, even if some key shares are compromised or lost, the assets remain secure. For instance, if a company sets a threshold of five signers, then five ‘key shares’ in the total group must approve a transaction before it is finalized.

This feature has broad practical applications for businesses. It ensures that hackers cannot breach the system even if a few devices or individuals are compromised. The key shares are stored in multiple locations, and the organization can adjust the signing threshold as needed to meet security or operational requirements.

A new era of MPC technology, named trustless MPC, allows users of this technology to allocate several shares per MPC signer so that an organization can express its org chart in the allocation of key shares. For example, a C-suite level executive could be assigned more signing authority than a department head, and they would have more authority than their direct reports, and so on.

How MPC could have prevented the WazirX breach

The WazirX security breach exposed the flaws of centralized private key systems, where the loss or theft of a single key can result in the compromise of an entire digital asset portfolio. Had WazirX employed trustless MPC technology, the hackers would not have been able to compromise the private key because no full key would have existed. Even if the hackers had gained access to some of the key shares, they would have needed to compromise multiple participants to breach the system—a nearly impossible task given the distributed nature of MPC.

MPC, when implemented properly, ensures that no single entity has control over an organization’s digital assets, providing an enhanced level of protection in case of insider threats or external attacks.

Proper implementation of trustless MPC also involves the concept of self-custody, where signers store the individual share data on devices that are in their physical possession. This means that the key share data is never stored on the cloud, so third-party actors are unable to take hold of this information and abuse it.

MPC vs. multi-sign wallets: Why MPC is the future

While multi-signature (multisig) wallets have been a popular solution for improving security, they fall short in several key areas compared to MPC. In a multisig system, each party holds a full private key, and the system requires multiple keys to approve a transaction. This adds a level of security but also increases complexity, cost, and the risk of compromise since each participant holds a full private key.

By contrast, trustless MPC allows the signing process to take place without ever generating a full private key. Instead of multiple signatures being verified by the blockchain (as in a multisig wallet), MPC produces a single signature from the collaborative process. This results in lower transaction costs, as only one signature verification is needed on-chain, regardless of how many participants are involved.

The efficiency and privacy advantages of MPC

One of the key benefits of trustless MPC is its efficiency. Since the system generates a single cryptographic signature, the blockchain only needs to verify one signature, saving on gas fees and improving transaction speed.

Moreover, MPC enhances privacy. Because each participant only holds a share of the key, no one can piece together the complete private key or learn the key shares of others. This makes it much harder for malicious actors to compromise the system. Unlike multisig wallets, which expose multiple public keys, MPC ensures that the process remains entirely private, further reducing the attack surface.

Why businesses should adopt trustless MPC

With the increasing frequency and sophistication of cyberattacks targeting digital assets, it’s clear that organizations need to adopt stronger security measures. Trustless MPC offers a robust and flexible solution that surpasses traditional models in terms of security, efficiency, and scalability.

Businesses that manage large volumes of digital assets can particularly benefit from the customizability of MPC. For example, key shares can be distributed across different roles within the organization, aligning with existing business structures. This means that executives, compliance officers, and other stakeholders can have differing levels of signing authority, ensuring that high-level transactions require approval from the appropriate individuals.

Resilience and flexibility in disaster recovery

Another key advantage of trustless MPC is its resilience. In the event of a disaster, such as the loss of key shares or the compromise of certain devices, organizations can still recover their assets by pooling together the remaining key shares. This disaster recovery feature makes MPC systems extremely adaptable and resistant to even the most severe attacks or failures.

For businesses that require the ability to dynamically adjust signing authority, MPC’s resharing functionality provides flexibility without compromising security. As an organization’s needs change, they can add or remove signers and modify thresholds, all while ensuring the highest level of asset protection.

The future of digital (and tokenized) asset security is trustless MPC

As digital assets continue to play an increasingly important role in the global economy, securing them has never been more critical. Trustless multi-party computation represents the future of digital asset security, offering an unparalleled level of protection by eliminating single points of failure, reducing costs, and preserving privacy.

In a world where digital asset breaches can result in catastrophic financial losses, companies need to adopt trustless MPC as a cornerstone of their security strategy. By distributing key shares across multiple participants, requiring threshold approvals, and providing robust disaster recovery options, trustless MPC ensures that businesses can safeguard their assets against both internal and external threats.

The transition to trustless systems is inevitable, and organizations that embrace this technology now will be well-positioned to protect their digital assets in an increasingly volatile cybersecurity landscape. The question isn’t if trustless MPC will become the standard—it’s how soon businesses will adopt it to stay ahead of the curve.

Luke Plaster is the chief security architect at io.finnet. Prior to joining io.finnet, Luke held several senior positions in various firms, including the role of a senior architect at Binance, where he led the development of the Binance Chain. Luke authored a popular open-source library for MPC threshold signatures, which his team used to build an internal digital asset cold storage system. He has also led teams for several popular DeFi protocols in the emerging web3 space. With over 15 years of experience in the technology industry, Luke has pioneered developing and implementing core business systems. He has worked on large projects in various areas of finance technology, including developing exchange matching engines, digital asset custody systems, and payment gateways. Luke has also worked as an independent consultant, advising and guiding businesses looking to utilize blockchain solutions and being a key contributor to industry events. He shares his knowledge with the next generation of web3 entrepreneurs by engaging with a local educational institution.