MPC Vs Smart Wallet

MPC Vs Smart Wallet

Security is a challenge, as evidenced by the 1500 BTC that may be lost everyday.. This has driven research into alternatives, leading to innovations like paper wallets, hardware wallets, and multi-sig wallets. While these have improved security, they come with their own shortcomings:

Hardware wallets

Hardware wallets are not good enough. If you lose your hardware wallet, you risk losing your funds, and wearing it as a chain doesn’t help. Additionally, they are vulnerable to supply chain attacks. Even though hardware wallets have minimized this risk, hardware cannot be audited in the same way as open-source software.

Multi-sig wallets

Multi-sig wallets are better but not perfect. For instance, in a 2-of-4 structure with friends, if one person is compromised, you don’t have to wait for another compromise to act. You must move funds to another multi-sig wallet, which incurs fees and takes time.

MPC is good

MPC wallets like Zengo and Fireblocks have proven to be superior alternatives. They offer no single point of failure, ease of transactions, and eliminate the need to store a 12-word seed phrase. However, they lack functionalities such as sending private transactions, recurring payments, launching tokens or NFTs, and setting up loyalty programs without using a dApp.

Smart Wallets + MPC is better

Smart wallets provide more functionality than standard EOA wallets, enabling private transactions, recurring payments, and more, aiming to create a Venmo or PayPal alternative on Ethereum. There has been debate on whether Ethereum should adopt smart wallets or MPC wallets, but these technologies are not mutually exclusive. As seen on Shakespay, they can be complementary. Shakespay uses MPC for key management and smart wallets for account management.