Spatium Academy (2024)

MPC vs Multisig Wallets: Why MPC Wallets are Better?

May 2, 2024

What is multisig?

A multisig wallet is crypto software used to store digital assets and provide shared access to funds. This type of wallet is more secure than traditional wallets because it involves several people/entities applying their private keys and signing a transaction. All wallet owners, which could be as many as required, agree on the financial operation and approve the transaction. If someone doesn’t provide their private key to sign a transaction, the operation won’t be fulfilled. Such a way to store digital assets helps to share control over them and at the same time, protect the wallet account from hacking.

What is MPC?

MPC technology is used to facilitate crypto wallet-user interaction and at the same time secure the assets. MPC takes the crypto wallet private key application off the picture and substitutes it with shards. These could be 2 or more shards, based on the wallet settings. A transaction is only signed when both shards are activated at the same time.

Differences between MPC and multisig wallets

Taking into consideration that both MPC and multisig wallets provide shared control over private key management, we can go deeper into the features each type of wallet has. The most important point is to stress that multisig wallets are mostly used by companies and enterprises, they are not very convenient for ordinary users.

On-chain/off-chain transactions

Transaction signing in multisig wallets takes place on-chain, and every signature (blockchain address) is seen by everyone. MPC wallet provides signing operations (activation of shards) off-chain and only then sends a transaction to the blockchain.

Key recover

MPC wallets offer private key recovery mechanisms, while multisig wallets provide no private key recovery.

Transaction speed

MPC wallets provide near-instant transactions because the user-server communication takes place off-chain. Multisig wallets have to send the data about each private key activation to the blockchain. Also, the waiting time is longer because you have to wait for all entities to sign a transaction.

Gas fees

Finally, MPC wallet transactions contain no or very small gas fees, while multisig wallets charge gas fees for each private key activation transaction.

Conclusion

The two types of wallets discussed in the post have one goal: to provide more protection to wallet accounts and help you not to be easy targets for hackers and scammers. The difference is in the technologies behind it. While multisig wallets prefer to go with multiple signatures (private key applications) to sign a transaction, MPC wallet splits the private key into two or more shards thus, the private key is never revealed.

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