What Is MPC (Multi-Party Computation)?

In MPC-based wallets, a complete private key never exists together on a single device. Instead, the key is represented by key shares distributed to different parties (for example the user's phone, a server and a backup service). When a transaction is to be signed, a set number of parties take part in the computation using their own shares and a valid signature emerges; this method is called a threshold signature.

The difference from multisig is that the signing process takes place off-chain. A single standard signature appears on the blockchain; this keeps transaction fees low, lets the method be used on networks without smart contract support, and keeps the signers' structure invisible from the outside. These features have made MPC widespread in institutional custody services and in some mobile wallets that do not require a seed phrase.

The security of MPC depends on the protocol being implemented correctly; in the past, vulnerabilities that allowed key shares to be leaked were found in some implementations. If some of the shares are held by the service provider, the user may become dependent on that provider for recovery and access. The inability to audit the signing rules on-chain is also a transparency difference compared with multisig.