Over the past year, it has become evident that multi-signature wallets are posing greater compatibility challenges for its users and the risks are continuing to grow. Despite broad adoption, multi-sig simply isn’t adaptable for the breadth of digital assets and numerous workflows in existence. Fortunately, Multi-Party Computation (MPC) presents a secure alternative to address these needs.

First off, what do we mean by compatibility? We use this phrase to capture two critical functions of a digital asset wallet. The first is breadth of support. While Bitcoin is the most widely held digital asset and has the highest market capitalization, there are hundreds of tokens across several chains, each with their own benefits and intended use cases. The security challenge is to have a solution that works regardless of the asset chosen. The second critical function of a wallet is interoperability between wallets. There are dozens of wallet solutions available in the market today yet some solutions do not work well with others. This can impair a firm’s ability to conduct business effectively by limiting with whom they can transact.

In this post, Curv explores the significance of wallet interoperability and how MPC is crucial — not only for accessibility but also for “future-proofing” digital asset security.

Compatibility Issue #1 — Asset agnostic

Most recently, Bitcoin SV implemented a hard fork whereby it moved away from Pay-to-Script-Hash (P2SH), over which multi-sig providers based their implementation. Multi-sig wallet providers decided to forgo BSV integration and instructed users to either convert BSV holdings to bitcoin or move to an external wallet. Needless to say, this highlights one of the primary problems with incompatible multi-signature wallets. Dropping BSV support at a whim sets a dangerous precedent for hard-forked tokens and user’s need to secure them. This is one reason why wallet interoperability is essential.

Interestingly, Curv recently announced native support for BSV. Curv’s MPC wallet solution is not dependent on the P2SH transaction standard that BSV is moving away from so Curv still is able to deliver on the utility, security, and efficiency sought by institutions and retail holders alike. New assets will continue to emerge and develop and therefore, it will be even more imperative than ever before to have a wallet solution that is asset agnostic.

Compatibility Issue #2 — Transfers between wallets

In cases where assets are not natively supported by a wallet’s security protocol (such as ETH for Multi-Sig), a workaround utilizing specialized smart contracts to extend token compatibility is oftentimes introduced. As detailed in a previous Curv blog post, this workaround has its drawbacks.

Multi-sig providers utilize smart contracts, whereby the transactions originating via this method are implemented within the smart contract itself. In these cases, the address provided for smart contract transactions isn’t the actual recipient address. If an exchange or wallet doesn’t support these internal transactions, then multi-sig smart contracts are rendered useless. As a result, many exchanges are unable to utilize multi-sig solutions as their clients may use wallets that do not receive requested withdrawals.

While single-sig wallets don’t have this problem, they do have a glaring attack vector — the clue’s in the name. As referenced in an earlier blog post, a single-sig wallet and attempts to avoid a smart-contract based on multi-sig may have been to blame for the November 2019 Upbit hack.

Curv’s Multifaceted MPC Solution

Fortunately, there’s a technology capable of satisfying all the requirements and addressing the challenges detailed above. Multi-party Computation (MPC) protocols enable several entities to trustlessly compute a calculation using individual inputs without divulging data. Implementation of MPC technology is few and far between, and Curv is among the few pioneers championing the innovation to secure digital assets. Curv removes the single point of failure and increases efficiency by eliminating the need for a private key altogether. Instead, independent and undisclosed inputs, referred to as shares, are randomly generated and used to approve and sign transactions.

Unlike multi-sig, MPC security is completely off-chain and mathematically secure. This agnostic approach allows for versatility and compatibility with any ledger or destination wallet, mitigating the incompatibility challenge.

Attack vectors remain present with multi-sig models and continue to emerge from the smart contract workaround — stemming from something as simple as a bug. Free from the limitations of multi-sig wallets, Curv’s MPC wallet offers an interoperable solution to digital asset security without any of the sacrifices presented by alternatives.

Are your wallets incompatible and insecure? Visit curv.co and request a demo at info@curv.co