How Tokenizer is Securing User Funds through Web3auth and MPC Wallet
The discussion around how to securely store digital assets has been one of the most hotly contested in web3. This debate mostly centers on how user funds can be kept without compromising on decentralization as a key web3 feature.
So far, the result has been mixed. Notable solutions have largely tilted users towards choosing between self-custody and ease of use. As of now, the most common ways for users to secure their digital assets include keeping assets on centralized exchanges, holding assets in cold storage, or storing them in a hardware wallet.
Users who choose centralized exchanges will enjoy their ease of use. However, this comes at a price. Users will have to forfeit their private keys and hope that the exchange does not get hacked. Users who choose cold storage constantly have to keep their private keys safe. A failure to do so could result in the loss of their digital asset. Storing your digital asset on a hardware wallet also means that a user keeps the device safe at all times.
The entire process seems cumbersome for most digital asset investors. Moreso, it even deters crypto adoption among those who are not yet into it. Constant news of wallet hacks and exchange collapses has also not helped the situation. Thus, a new and secure solution must be developed to protect digital assets and encourage adoption.
While the current system comes with its weaknesses, a new model of digital asset security is emerging and Tokenizer is set to adopt this system to guarantee asset security to all users. This model is known as a secure Multi-Party Computation or MPC.
What is MPC?
A multi-party computation is a form of encryption security system that enables two or more parties to share the security of a crypto wallet.
In the traditional crypto wallet protection system, the private key is either with the crypto exchange or with the user. This system makes a wallet susceptible to what is known as a “single point of failure.” This means that a hacker only needs to hack an individual or an exchange to gain access to all the funds in a crypto wallet.
MPC prevents this kind of situation. MPC utilizes what is known as a “share” system. This system breaks a private key into different components and then shares each component with the corresponding number of parties to the wallet. In this instance, the private key is shared between a platform (like an exchange for instance) and the user. Each of these parties does not have access to the component that the other party holds. Thus, a crypto wallet cannot be compromised from a single point of fault.
Putting it simply, if a hacker hacks an exchange, they still will not be able to access user funds as they still require the other components from users. This multiparty form of security, therefore, protects user funds and simultaneously promotes the main tenet of web3, which is decentralization.
Securing User Funds through MPC Wallets
Following the recent developments in the crypto space, such as the collapse of FTX, Celsius, and 3AC, the Tokenizer platform will be adopting the MPC wallet. This will help to guarantee the protection of user funds. At the same time, MPC will institute a non-custodial wallet system where private keys are shared between users and Tokenizer.
Based on the underlying principle of MPC, neither Tokenizer nor users will have full custody of any private key. At the same time, neither party will ever know what components make up the keys held by the other.
Similarly, a single point of failure is completely eliminated. Thus, it becomes difficult for any hacker to access funds on Tokenizer. Ultimately, MPC serves as a win-win situation for all parties. MPC makes it possible for users to invest without fear, and it also promotes Tokenizer as one of the foremost promoters of Web3.
Conclusion
MPC could become an industry-wide solution for protecting user funds. Recent events could be the wake-up call that ultimately gears crypto in this direction. While adoption is still in its infancy, Tokenizer has taken a giant leap in this direction. Now, you can make your investment without fear of ever losing your funds.
