The Good Tech Companies - Seedless and Secure: How 2PC-MPC is Transforming Key Management in Web3

Episode Date: January 9, 2025

This story was originally published on HackerNoon at: https://hackernoon.com/seedless-and-secure-how-2pc-mpc-is-transforming-key-management-in-web3. Self-custody wallets are the only way to store your private key access to bitcoin in a secure manner. Check more stories related to tech-stories at: https://hackernoon.com/c/tech-stories. You can also check exclusive content about #ika-network, #ika-network-news, #ika-network-announcement, #blockchain, #dlt, #crypto, #crypto-custodians, #good-company, and more. This story was written by: @ishanpandey. Learn more about this writer by checking @ishanpandey's about page, and for more stories, please visit hackernoon.com. Self-custody wallets are the only way to store your private key to bitcoin. They are secured by cryptographic technologies like Multi-Party Computation (MPC) and Two- party computing (2PC) Human Keys generates high-entropy keys from human-friendly inputs like email addresses, PINs or biometric data.

This audio is presented by Hacker Noon, where anyone can learn anything about any technology. Seedless and secure. How-to PC MPC is transforming key management in Web3. By Ashan Pandey, if you've spent any amount of time in crypto, you're likely to have heard the expression, not your keys, not your Bitcoin. A mantra preached by privacy hardliners, it emphasizes the importance of using self-custody wallets rather than leaving your funds in an exchange account or software wallet. Owning a self-custody wallet is analogous to storing your assets in a vault and retaining possession of the only key. Only unlocking the door is a bit more laborious. Users must type

in their seed phrase, a lengthy sequence of random words. Such is their importance, some individuals get their phrases whole punched into sheets of metal, the better to survive a house fire or flood. Although recovery phrases have long been the industry standard, they present significant challenges, requiring safe storage and the accurate input of meaningless jumbles of words. What happens if you misplace your phrase or, worse still, someone steals it? The cautionary tale of James Howells, who accidentally discarded a hard drive containing What happens if you misplace your phrase or, worse still, someone steals it? The cautionary tale of James Howells, who accidentally discarded a hard drive containing the private key to 8,000 bitcoins in 2013, stands as a stark warning. The poor guy is still urging

his local council to excavate a landfill site in the fading hope of finding his pot of, digital, gold. So, what's the alternative to seed phrase-based wallets? Crypto key management is evolving although seed wallets are highly secure, providing users safely store the ermnemonic phrases. Alternatives are starting to emerge which provide the same level of peace of mind without the substandard UX. Among the options to have come off the production line in recent years are those secured by cryptographic technologies like multi-party computation, MPC, two-party computation with MPC, 2PC-MPC, and account abstraction, A. The latter of which allows users to utilize smart contracts as their accounts. We have also seen the arrival of PASC-based solutions, wallets that utilize

biometrics and pins to secure access rather than seeds. Each of these options has merit, with 2PC-MPC representing a particularly promising innovation. While two-party computation splits private keys into two distinct shares, one held by the user and another by a custodian 2PC-MPC enhances the model by incorporating an additional layer of MPC. Thus, reconstruction of a private key cannot be made without participation from users and validation from a decentralized, non-collusive network of nodes. The 2PC MPC system's high degree of programmability, meanwhile, enables the implementation of sophisticated security features such as spending limits and time-locked transactions, features more typically associated with smart contract wallets. 2PC MPC at scale

with IKA two-party computation with MPC is a relatively recent innovation, but even still, it has made a big impact in a short time period. We can see evidence of this with the ICA network, which describes itself as the first sub-second MPC network. Capable of handling up to 10,000 transactions per second TPS across hundreds of signer nodes while maintaining zero trust security, ICA aims to tackle the shortcomings of traditional MPC networks particularly where scalability and latency are concerned. At the heart of ICA's vision is D-Wallet, the industry's first truly non-collusive and massively decentralized signing mechanism. Rather than signing transactions with a seed phrase, signatures are generated based on agreement between the user and network signers.

In other words, secret shares are generated by the user and THE network, 2PC, with the latter being encrypted and made operational through a threshold of nodes, MPC. In short, D wallets function as trustless, programmable asset management tools. From private keys to human keys complementing these advances is Holonim's human keys, another recent innovation in wallet management. In contrast to mnemonic phrases, human keys generates high entropy keys from human-friendly inputs like passwords, email addresses, or biometric data. By doing away with seed phrases altogether, Human Keys makes wallet management much more palatable to mainstream users.

Holonym's implementation also includes Zero Knowledge, ZK, proof of personhood for account recovery, meaning users can verify their identity without having to actually expose any sensitive information. Refreshingly, Holonym provides unified access to crypto assets across multiple blockchains via a single DAPP interface. The combination of 2PC MPC's robust security model with user-friendly innovations like human keys prove that seed phrases, for all their advantages, aren't the only show in town when it comes to securing your wallet. By eliminating trade-offs between security and usability, recent technological advances pave the way for greater wallet adoption while preserving the spirit of decentralization that represents the industry's

DNA. Don't forget to like and share the story. Tip Vested Interest Disclosure. This author is an independent contributor publishing via our business blogging program. Hacker Noon has reviewed the report for quality, but the claims herein belong to the author. Hashtag D-Y-O-R. N-Thank you for listening to this Hacker Noon story, read by Artificial Intelligence. Visit HackerNoon.com to read, write, learn and publish.