##### How Secure MPC Protects Custody Wallets?

Secure MPC is a branch of cryptography that tries to create methods that enable parties to jointly calculate a function over their inputs while preserving the privacy of those inputs. In contrast to traditional cryptographic tasks, where the adversary is an outsider (an eavesdropper on the sender and receiver), and cryptography maintains the security and integrity of communication or storage, the cryptography in this paradigm protects participants' privacy from one another.

The following characteristics help MPC achieve outstanding key security:

1. Throughout the entire lifecycle of a key, Secure MPC never generates a full private key on any machine, at any time. Keys are instead created by secure MPC in the form of distributed key shares, spending their entire existence within the bounds of the system on which they were created. This attribute sometimes referred to as “keyless” eliminates many vulnerabilities that have to do with key generation, key distribution, key storage, and key destruction.


2. Secure MPC runs entirely off-chain from the blockchain technology used by any digital asset. In contrast, alternative multiparty approval schemes such as MultiSig run on-chain.

The benefit of an off-chain scheme is that a change to a security policy, such as an approver or the number of approvers, is not recorded on the blockchain, decoupling key management from the underlying ledger technology. This eliminates the electronic breadcrumb trail that can provide would-be hackers with insight into your security policies or update practices. Reducing this electronic footprint increases privacy and reduces overall security risks.


3. While Secure MPC runs off-chain, the application can still provide a full record of exactly which parties participated in the approval of any transaction, as well as all other security audit records. This approach retains full audit and accountability enforcement which is essential for any effective security scheme


4. Secure MPC natively supports multiparty approval models. Each party in possession of a key share acts as an MPC approver. The practice of requiring multiple MPC approvers mitigates the risk that an internal bad actor gains access to a full key and uses it fraudulently. Secure MPC systems can be designed to require multiple parties or quorums of parties to satisfy their security and compliance policies before an MPC party grants their approval and generates a partial signature. It can also be designed to mandate that certain parties be required for any m of n quorum approval schemes.


5. MPC can continue dependable operations, with privacy and accuracy, in the presence of different attacks. As a result, lawful transactions are signed even if a third party tries to thwart them by purposefully generating an incorrect signature. When a threat actor is present in the trusted environment, almost all alternative security techniques become inoperable or useless.


6. Secure Signature Generation: Secure MPC allows each party to use their share of a key to generating a partial signature within the machine securing the key share. The key share is never accessed by or presented to any other system to generate the partial signature, so the key share never leaves the party’s machine. The partial signature is then exported from the machine. When enough parties have generated and exported partial signatures they are combined to create a full signature. Through this process, the key share is never disclosed to any other party and never leaves the security of the machine on which it was created.


7. Private keys are binary numbers, and hexadecimal strings are frequently used to represent them in key share rotation (or refresh) systems. Secure MPC key shares are just various mathematical combinations that are utilized as inputs to a joint computation to equal the value of the cryptographic private key. The combination of key shares, each of which stands for a certain number, can be altered whenever necessary without altering the private key itself.

A malicious actor is less likely to compromise enough key sharing parties' machines to steal the key by rotating or updating these key values. The use of an automated key sharing renewal depends on the desired MPC security model. Without altering the actual public-private key pair, secure MPC key shares offer key share rotation.


8. Since no full key ever exists in any form, on any machine, there is no digital memory of a key that could be harvested from previously used machines. As a result, the theft, misplacement, or retirement of mobile phones, laptops, desktops, servers, virtual machines, or containers that once hosted a key share cannot be mined to derive a full key.

Bitpowr offers an MPC-based wallet service to help you manage your digital assets, and accept crypto payments.  [Contact sales](https://www.bitpowr.com/contact#contact) to get started!

Also check out [our documentation](https://docs.bitpowr.com/docs) here 

## References

[Secure multi-party computation Wikipedia](https://en.wikipedia.org/wiki/Secure_multi-party_computation)

[MPC Alliance](https://www.mpcalliance.org/blog/an-introduction-to-secure-multiparty-computation-for-digital-asset-custody-wallets)

[Scalable and Unconditionally Secure Multiparty Computation](https://www.iacr.org/archive/crypto2007/46220565/46220565.pdf)

[Securing Digital Assets Under Custody](https://sepior.com/resources)

[Sepior MPC](https://sepior.com/blog/secure-multiparty-computation-mpc-for-digital-asset-custody-wallets)

Secure MPC is a branch of cryptography that tries to create methods that enable parties to jointly calculate (read more)

bi05;10.jpg

How does "Secure MPC" Protect Custody Wallets?

#### **MPC vs Multi-sig Wallets: Which is best for your Business**


With fiat currency and paper notes, you can keep all of your money in a single wallet, even if you have 10 different currencies. On the flip side imagine getting separate wallets for Dollars, one for Naira, and another for Euros, that would be weird.

The same analogy goes for cryptocurrency, the burden of remembering different [seed phrases](https://academy.binance.com/en/glossary/seed-phrase) for multiple wallets, managing multiple accounts, and all the security considerations required. it would be a difficult experience juggling these many wallets and digital assets. With Bitpowr’s Multi-Party Computation (MPC) based wallet it becomes a walk in the park. Some will argue that Mutisig wallets are better, in this post, we will cover the advantages MPC wallets have over on-chain multisig for organizations managing digital assets.

Build your blockchain business for scale, Secure your assets in a tested and trusted Wallet architecture. Button: Start Now

 

#### **What is a Multisig Wallet?**

Multisig stands for "Multi-signature," a particular kind of digital signature that enables two or more people to sign a document as a group. This adds an additional layer of security to your wallet compared to a single signature wallet which can easily be hacked.

 

#### **What is a Multiparty computation(MPC) wallet?**

MPC wallets, or multiparty computation wallets, are similar to Multisig Wallets but designed to provide the highest level of security to companies, banks, and governments looking to Manage their digital assets.

To better understand it, consider an MPC wallet to be a common wallet, with the exception that the passwords and control of these devices are stored on different devices. Each of the devices that store the keys has a key that, when combined with the others, allows the funds to be used.

 

#### **The Challenge with Multi-sig Wallets**

Prior to Multisig wallets, cryptocurrencies were typically held using just one private key. The funds linked to a private key could be accessed by anyone with access to the private key itself. With multi-sig came an additional layer of security to the system. While Multisig wallets solved problems of single-signature wallets,  they also introduced new issues; The main one being that Multi-signature wallets are not compatible with all crypto protocols. So, multi-signature wallet providers experience many issues in supporting new chains securely.

On the other hand, it is very slow as Wallet providers must implement different codes for each on-chain multi-signature solution.

In a nutshell, Multi-signature-based solutions are no longer able to meet the demands of a digital asset business in today's rapidly evolving environment, with hundreds of cryptocurrencies and Blockchains.

 

#### **Benefits of Using MPC over Multisig**

**1. MPC supports multichain**

**The Multisig challenge:** More digital assets than ever are distributed across an increasing number of blockchain networks. Only a selected minority of these networks, like Bitcoin and Ethereum, have the technical ability to enable complex multi-signature schemes. They only support assets linked to that particular chain because the signature takes place on-chain.

For instance, Bitcoin Multisig only accepts BTC, whereas Ethereum Multisig only supports  Ethereum-based currencies. This implies that you will require several signature solutions if your business deals with a large variety of digital assets.

**The MPC Advantage:** In comparison to Multisig, [Bitpowr MPC wallet](https://www.bitpowr.com/) manages many assets for you on a single platform as opposed to juggling multiple signature systems. Presently the Bitpowr MPC wallet is compatible with Bitcoin, Ethereum-based assets, and will eventually support more digital assets across all blockchains.

**2. Flexibility**

**The Multisig challenge**: Onchain multisig is rigid, which makes it challenging for big digital asset businesses to scale. Fixed approval quorums are one of the main issues. To keep assets secure, signing methods must be continuously modified when new employees are employed and old ones are let go. However, as soon as an onchain multi-sig wallet is made, the approval quorum cannot be changed.

Therefore, in order to change the signature scheme and add or remove a cosigner, you must first create a new wallet, then pay network fees to transfer the funds, and finally inform all of your trading counterparties of the new address. Otherwise, you run the risk of them sending money to the wrong location!

**The MPC Advantage:** With Bitpowr MPC wallets, approval quorums are quickly adjusted to meet changing organizational requirements. Therefore, you can keep the same address rather than having to shift the full amount each time a cosigner is added or withdrawn, which would lessen the operational load and decrease the possibility of catastrophic errors like; large-scale data leakage,

**3. Ease of Administration**

**The Multisig challenge**: MPC gives you more control over governance than simply deciding how many employees must sign a transaction.

**The MPC Advantage:** You can assign an unlimited number of transaction approvers to a policy, and also delegate a variety of permissions that correspond to real-world organizational roles, such as administrators who can edit approval schemes and traders.

**4. Low Gas fees**

**The Multisig challenge**: The majority of blockchains charge network fees based on the number of onchain operations required to complete a transaction. As a result, the more people involved, the more expensive it is to carry out.

Bitcoin and Ethereum, for example, support simple multi-signature transactions. However, the added complexity of having multiple participants makes them much more computationally intensive, doubling or tripling the transaction cost.

**The MPC Advantage:** MPC-based wallets will never have fees that are higher than an ordinary transaction on the underlying chain, regardless of the number of signers involved.

**5. Faster transactions**

**The Multisig challenge**: Blockchains encounter a lot of network congestion, which pushes up transaction fees and poor processing rates. Additionally, as miners attempt to fit as many transactions as possible into each block, Multi-sig transactions are more likely to be put last because they take up more space and are larger due to the additional metadata they contain. Delays therefore cannot be avoided unless you are willing to pay more for expedited processing.

**The MPC Advantage:** In contrast, decentralized MPC does not rely on additional calculations made on the underlying chain. Instead, the signature calculation is done on the  Network, and then just one small transaction is sent to the blockchain, avoiding long wait times and exorbitant transaction costs.

 

#### **Conclusion**

Are you ready to reap the benefits of Bitpowr MPC Wallets? We are delighted to[ hear from you](sales@bitpowr.com) and discuss how Bitpowr can help you manage your crypto assets safely. 

Check out [our documentation](https://docs.bitpowr.com/docs) to learn more about our wallet services and other related products.
[Contact sales](https://www.bitpowr.com/contact#contact) or send an email to sales@bitpowr.com to get started!

Bitpowr MPC wallet manages many assets for you on a single platform (read more)

July6th article.jpg

MPC vs Multi-sig Wallets: Which is best for your Business

#### **What is Multiparty Computation (MPC)**

Wallets are to digital assets what air is to life; the former supports the latter. A digital asset lives in a wallet so to speak, they help to store and manage our cryptocurrencies securely. 

*One of the most secure wallets currently available is the Multiparty Computation Wallet.*

 

### **What exactly is Multiparty Computation?**

Multiparty Computation (MPC) is a cryptography technology that enables a group of different data owners to jointly compute a function of their private inputs, without requiring them to share their private data with one another or any other party. For a digital asset custody wallet like [bitpowr](https://www.bitpowr.com/solution/wallet), the “different data owners' ' are the multiple parties that hold a share of a private key and use those key shares to provide their part of a multiparty approval of a transaction. Their “joint computation” generates a single digital signature to release digital assets for transfer to a third party.

 

#### **A brief history of Multiparty Computation**

The concept of multiparty computing emerged in 1970. Historically it has mostly been used to hide information. Modern cryptography uses math and computation to encrypt and decrypt messages or to guarantee the authenticity of the information. Today, this technology is currently found in a variety of smartphones and computer chips.

The idea to create multiparty comes from the need for a technology in which security models could be enabled where a variety of parts are required to access the system. Each of the parts allows the system to be unlocked, depending on the level of access. It was not until 1990 that this concept came to life thanks to [David Chaum](https://blog.bitnovo.com/en/who-is-david-chaum/), a pioneer in the cryptographic world who presented an elaborate paper on this protocol. The paper was called “**Unconditionally Secure Multiparty Protocols''**.

 

#### **How does the Multiparty Computation technology work?**

 

The operation of an MPC Wallet is divided into three essential parts: **key generation, address generation, and access to funds**. In the following paragraphs, we will see what each one consists of in detail.

 

#### **1. Generate Key**

This is the mechanism with which the wallet generates private and public keys and it also creates the registration of the private and public keys for the wallet's locking mechanisms.

This is how the unlocking devices generate a pair of public and private keys. They are then combined with those of the other devices to generate the MPC wallet's private and public keys. This scheme attempts to distribute wallet control in a simple and similar manner to prevent a hacker from taking control of the wallet.

It should be noted that these keys are generated by a **protocol** defined by a very simple mathematical formula: **nF(d1, d2, d3) = max(d1, d2, d3).**

You may be thinking that this formula is too **complicated** and difficult to understand, however, it simply means that each participant has in its possession private data that would be from **d1, d2…dN**. Thanks to this private data, by using a public function called F we can calculate how much the private data is worth as well as enable the use of the wallet. For this, we use the cryptographic signature algorithm which can be either **ECDSA, EdDSA, Schnorr**, or any other compatible one. If we add all these private data we obtain as a result a cryptographic reason that provides access to the wallet.

#### **2. Generate Address**

In this case, MPC wallets are very similar to the ones we already know, like Multisig wallets. Either party can request to generate a public key. The generated address can then be used to receive funds.

This is possible thanks to asymmetric cryptography. The security of sharing the public key is due to the complexity of performing the process opposite to the generation of the public key. It is, therefore, safe to generate public keys for each member.

As for the private key, the goal of the MPC wallet is to keep the private key divided among several devices to avoid easy balance control.

#### **3. Access to funds**

In order to access the funds, **the conditions determined** during the creation of the MPC wallet must be fulfilled. If four devices with private data were entered during generation, these four devices must be present to **access** the wallet.

To protect these devices, cryptographic systems, security modules such as **HSM** or other **security** features are often used. In fact, only originally paired devices will be able to access the **MPC wallet** and the **funds**.

 

#### Use cases MPC, including genetic testing and auctions.

As the necessity for information security increases along with digitalization, MPC is increasingly used to protect sensitive data by acting as a digital non-disclosure agreement restricting who can access what data. These are a few examples of its use case.

- MPC can be used in genetic testing to allow individuals to evaluate their own genetic profile without unintentionally disclosing to authorities or insurers how quickly they metabolize caffeine or how likely it is that they will develop diabetes.
- MPC can be used in sensitive research to safely gather and analyze data such as financial and medical information—without requiring people to divulge private information to a third party.
- MPC can be used in sealed-bid auctions to guarantee that each bid entered concurrently remains totally secret.

 

### Future Expectations for secure MPC.

MPC has rapidly established itself as the industry norm for protecting digital assets. Major financial organizations like Revolut, the biggest neobank in Europe, are switching to MPC. Other applications of MPC  include off-exchange matching, privacy-preserving statistics, and cloud private key management.

In the near future, multi-party computation will also have a big impact on things like Data-as-a-Service solutions, databases, cryptographic data security, etc.

The [Bitpowr MPC-based wallet](https://www.bitpowr.com/solution/wallet) helps your business scale much more rapidly and easily due to its blockchain agnostic nature and adaptability to unforeseen developments like blockchain forks, larger client bases, and technological advancements.

Do you have any questions or inquiries on how to get MPC wallets for your business?  [Talk to us](https://www.bitpowr.com/contact#contact)

The concept of multiparty computing emerged in 1970. (read more)

Bitpowr MPC ARTICLE (1).jpg

 What is Multiparty Computation (MPC)

#### **Bitpowr Wallet now Supports Bitcoin SegWit Addresses**

Before now, Legacy addresses were the original BTC addresses, now SegWit addresses are the newer address format with lower fees.

SegWit stands for Segregated Witness, where Segregated means to separate and Witness refers to the transaction signatures involved with a specific transaction. In a nutshell, it is an improvement over the current bitcoin blockchain in that it reduces the size required to store transactions in a block.

*Not all wallets support SegWit; if you use one that doesn't, you won't be able to send Bitcoin to a native SegWit address (starting with "bc1"). Moreover, compared to someone who utilizes a SegWit Bitcoin wallet, you will always pay more in fees. However, you can always use our Wrapped SegWit Address which solves the compatibility issues.*

 

#### **Why use SegWit addresses**



**1. Reduced transaction speed**

SegWit has the potential to increase transaction speed, which helps to reduce transaction costs in the Bitcoin network because more transactions can be recorded in a single block. Prior to SegWit, transaction fees could amount to more than $30. However, SegWit has significantly reduced that cost to less than $1 per transaction.

**2. Fixing transaction errors is simple.**

A significant problem with Bitcoin was the possibility of tampering with transaction signatures. A transaction between two parties may become tainted and be recorded on the blockchain forever if a signature is compromised.

Segwit eliminates the signatures from the transaction data, making it impossible to change this data. Additional blockchain community innovation, such as second-layer protocols, and smart contracts has been made possible by this update.

**3. Backward Compatibility**

Another advantage of SegWit is that it is backward compatible, which means you can send money from a SegWit address to a Legacy address or Wrapped Segwit address.

 

#### **How you can use SegWit addresses on Bitpowr**

It is now possible to generate Native SegWit addresses on Bitpowr in order to send and receive money over the Bitcoin network through our Dashboard and API .

 

**Bitpowr Dashboard**

It is very simple to get started on the Bitpowr Dashboard, First thing is to set up an account.

<img src="https://res.cloudinary.com/samvwede/image/upload/v1656418600/New_Account_8b2dd53f05.png" style="max-width:90%;"/>


After which you Select the type of wallet you want to use either Self custody or a custody wallet.


<img src="https://res.cloudinary.com/samvwede/image/upload/v1656418600/choose_wallet_a587154ef2.png" style="max-width:90%;"/>


Then you can select New asset, only Bitcoin and Litcoin have SegWit support on Bitpowr for now

<img src="https://res.cloudinary.com/samvwede/image/upload/v1656418600/New_Asset_e26bd9aa56.png" style="max-width:90%;" />


Click on view more to navigate into the Bitcoin assets

<img src="https://res.cloudinary.com/samvwede/image/upload/v1656418600/Bitcoin_Asset_a318501807.png" style="max-width:90%;"/>


Click on the Addresses tab, then click on the New address button. As you are creating the address, confirm the address you want to use is SegWit.

<img src="https://res.cloudinary.com/samvwede/image/upload/v1656418600/Create_Seg_Wit_account_5bd33b70b1.png" style="max-width:90%;"/>


SegWit address is automatically created and you can send and receive funds instantly.

 

**Bitpowr API**


To use the SegWit address through the Bitpowr API, you will need to have access to your API Keys. You can always get the API Key from the dashboard.

There are two ways to use SegWit addresses via API:

**1. Generating Address**: You can easily do that from the generate new address endpoint by passing `addressType` as `segwit` or `wrappedsegwit` to either generate a native SegWit address or wrapped SegWit addresses. This is default to `legacy` and for compatibility use the `wrappedsegwit` . You can look at the docs [here](https://docs.bitpowr.com/docs/address).

**2. Transaction Change Address**: When creating transactions for **Bitcoin** and **Litecoin**, you can pass in `changeAddressType` as `segwit` or `wrappedsegwit` to be able to use SegWit addresses as a change address. See [here](https://docs.bitpowr.com/docs/transactions).


#### **Closing**

In relation to scale, the introduction of SegWit was a significant step toward resolving many issues with Bitcoin and other blockchain networks. Blockchain networks are able to process more transactions more quickly and cheaply by combining SegWit with the second-layer protocols.

This also serves as a commitment to provide better solutions and features to help reduce transaction fees.

Check out [our documentation](https://docs.bitpowr.com/docs) to learn more about our wallet services and other related products. 
[Contact sales](https://www.bitpowr.com/contact#contact) or send an email to sales@bitpowr.com to get started!

On Bitpowr, it is now possible to create Native SegWit addresses to send and receive money (read more)

segwit.jpg

Bitpowr Wallet now Supports Bitcoin SegWit Addresses


Cryptocurrency transactions are a vital part of the digital economy, allowing individuals and businesses to transfer digital assets across the globe with ease. However, the decentralization and anonymity of blockchain technology can also create vulnerabilities, making it easier for malicious actors to engage in fraudulent activity.

To combat this, Bitpowr, a blockchain infrastructure provider, has introduced a new system to validate transactions, prevent fake transactions and improve the overall security of working with digital assets transactions.

At its core, Bitpowr's system works by using a combination of indexing and tracking to monitor cryptocurrency transactions in real-time from new blocks produced or any unconfirmed transactions present in the Mempool.

When a transaction is initiated and present in the Mempool or a block, the system immediately tracks and indexes it, allowing it to be validated against a series of rules and criteria to ensure that it is a legitimate transaction.

One of the key components of Bitpowr's transaction monitoring system is the use of indexers to index and track transactions as they occur, decode each transaction's data, and validate the information decoded. 

These indexers primarily monitor each block produced, index the block transactions, and scan through them in real time for transactions related to a specific address. This allows us to detect transactions related to addresses as soon as they occur and prevents transactions from slipping through undetected.

In addition to the monitoring system, Bitpowr introduces a new system that includes a series of validation rules that are applied to each transaction. 

These rules are designed to identify common signs of fraudulent activity, such as transactions that involve suspicious addresses (OFAC sanctions or chain abuse reports), suspicious or dangerous methods like (_approve_), invalid transaction status, and transaction confirmations.

If a transaction is flagged by the validation rules, it is immediately halted and flagged for further review, preventing it from initiating a notification to the customer's webhook.

Finally, once a transaction has been validated and confirmed, Bitpowr sends a webhook notification to the customer indicating that the transaction has been processed successfully. This notification includes detailed information about the transaction, including the amount transferred, the destination address, and the time and date of the transaction.

**Some of the methods that Bitpowr uses to validate transactions include:**

**Transaction Confirmation**: This involves checking whether the transaction has been confirmed by the blockchain network. In general, it's recommended to wait for at least 6 confirmations before considering a transaction as fully validated. Bitpowr scan transactions from 0 confirmation up to 6 confirmation.

**Transaction Validity**: Each transaction has a unique hash associated with it, which can be used to confirm that it has been added to the blockchain and not failed or reverted. By validating the hash, Bitpowr ensures that the transaction is legitimate and has been successfully processed.

**UTXO Outputs Validation**: For UTXO-based blockchains like Bitcoin, Bitpowr validates the output to ensure that the address, amount, and index match what was expected. This ensures that the transaction is sending the correct amount to the correct address.

**EVM Input Metadata Validation**: For Ethereum-based blockchains that use the EVM (Ethereum Virtual Machine), Bitpowr decodes EVM and TVM inputs data, validates each detail such as the ERC-20 token amount, contract address, contract method, and other vital information to ensure that the transaction is legitimate. Bitpowr also checks for the status of the transaction ensuring it was not rolled back or failed on the chain.

**AML Scan**: Bitpowr also performs additional checks by scanning addresses against databases like the Office of Foreign Assets Control (OFAC) and ChainAbuse to ensure that they are not associated with fraudulent or illegal activities. This provides an extra layer of security, helping to prevent transactions with known bad actors and reducing the risk of fraud and other malicious activities.

By combining these methods, Bitpowr is able to validate transactions in real-time, preventing fraudulent activity and ensuring that customers receive accurate and reliable notifications about their transactions. This approach helps to build trust and confidence in the blockchain network, making it easier for individuals and businesses to transact with confidence in the digital economy.

Overall, Bitpowr's system for validating transactions to prevent invalid or fake transactions is an important step forward in improving the security and reliability of cryptocurrency transactions. As the digital economy continues to grow, solutions like Bitpowr's will become increasingly important for ensuring the safety and security of digital assets.

Bitpowr, a blockchain infrastructure provider, has introduced a new system to validate transactions, prevent fake transactions and improve the overall security of working with digital assets transactions.

Our blog

Resources and insights

Introducing Bitpowr Transaction Validation Layer

How does "Secure MPC" Protect Custody Wallets?

MPC vs Multi-sig Wallets: Which is best for your Business

What is Multiparty Computation (MPC)

Bitpowr Wallet now Supports Bitcoin SegWit Addresses

Introducing Bitpowr Transaction Validation Layer

How does "Secure MPC" Protect Custody Wallets?

MPC vs Multi-sig Wallets: Which is best for your Business

What is Multiparty Computation (MPC)

Bitpowr Wallet now Supports Bitcoin SegWit Addresses

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