The personal liabilities associated with multi-party computation (MPC) based wallets are so great I don’t see how I (or anyone) could ever participate in a MPC wallet.
The core problem with MPC is an architectural one. While MPC does create a mechanism whereby multiple people can each hold independent parts of a key to eliminate single points of failure, MPC fails to offer any accountability about who participated in the signing of a transaction.
Imagine you create a 4-of-7 MPC wallet with 7 people participating, and 4 required to authorize a transaction. What if, unbeknownst to you, 4 of the other people holding key parts in the MPC wallet decide to steal the money? Because MPC does not offer signature accountability, no one can be certain who participated in the transaction. As such, even though you had nothing to do with the crime, you’re now a suspect, and it may take months or years to clear your good name.
Co-Signers Make MPC Even Worse
Vendors offering MPC services and co-signing dismiss this vulnerability and claim, “don’t worry, we keep track of who participated and will log all accesses to the signing process”. In other words, even though no one can determine who participated in the transaction from the signature itself, the vendors claim that they know the answer within their application logs. Thinking about this carefully, you’ll realize this makes the vulnerability even more severe.
With the vendor as a co-signer, you can now imagine the same attack scenario as above where 4 of the other participants on the wallet collude to steal the money. In this case, however, imagine one of the perpetrators is a rogue employee at the MPC vendor itself. In this scenario, you have no protection that the MPC vendor isn’t modifying its application logs and data. In addition having already been a suspect, the MPC rogue employee or vendor can now frame you for the crime. How would you defend yourself in this scenario? They hold all the cards, the data, the logs, and the technology. Unless you’re a cryptography expert, it will be extremely difficult to defend against them.
MPC vendors forget that accountability is a critical part of security, trust, and safety in a multi-user system. Participants on MPC wallets need to be very careful that they can fully trust all of their MPC wallet co-participants. This may not seem like a large risk if your wallet balances are small. But these vendors are encouraging MPC for protecting billions of dollars of assets.
Multi-signature systems, by contrast, offer all of the benefits that MPC systems offer, but without any ambiguity of accountability. With a multi-signature system, everyone on the blockchain can publicly see that you did not participate in the transaction without a shadow of a doubt.
I don’t see why anyone participating in the security of assets would even consider using MPC without multi-signature. The personal risk for the users of the MPC system is massive, and is simply beyond tolerances as the asset values go up.