To understand what zkEVM is, let’s first briefly review it's two underlying concepts: **zk-rollups and EVM.**

### **What is zk-rollups**

Zk-Rollups, short for Zero-Knowledge Rollups, are a Layer 2 scaling solution for blockchains that aim to improve the scalability and efficiency of transaction processing while maintaining the security guarantees of the underlying blockchain. They are designed to address the scalability limitations of Layer 1 blockchains like Ethereum.

In a traditional Rollup solution, transactions are processed off-chain, and only the summarized information is submitted to the main blockchain, reducing the computational burden and data storage requirements. However, this still requires the validation of transaction data on-chain, which can become a bottleneck as the network grows.

Zk-Rollups take this concept a step further by leveraging zero-knowledge proofs to bundle multiple transactions into a single succinct proof, which is then published on the main blockchain. This proof attests to the validity of the entire batch of transactions without revealing the details of individual transactions.

### **EVM**

The EVM (Ethereum Virtual Machine) is a virtual computer on the Ethereum blockchain that runs smart contracts and processes transactions. It serves as the execution environment for decentralized applications (DApps) on the Ethereum network. Every smart contract execution triggers the EVM to transition from an old state to a new state. The EVM defines the rule for calculating new and valid states from one block to another.

In Ethereum, the concept of "state" holds significant importance. It is represented by a Merkle Patricia Trie data structure, reflecting the current condition of the Ethereum network. This structure enables the tracing of transaction information from the latest block to the genesis block.

Every node in the Ethereum network plays a crucial role in maintaining continuity and achieving consensus, ensuring that each node has an identical view of the current state. The EVM (Ethereum Virtual Machine) is instrumental in preserving this consistency and ensuring the smooth operation of the network.

### **How does zkEVM work?**

At its core, zkEVM is a zero-knowledge proof system that allows for the execution of Ethereum smart contracts in a way that preserves the privacy of the transactions involved. This is accomplished through the use of zk-SNARKs, or zero-knowledge succinct non-interactive arguments of knowledge, which allow for the verification of the correctness of a computation without revealing any information about the inputs or the computation itself.

One of the key challenges in Ethereum scaling is the need to maintain the security and integrity of the network while allowing for greater transaction throughput. Traditional approaches to scaling, such as sharding, have focused on increasing the number of transactions that can be processed in parallel. While this can improve performance, it also introduces additional complexity and security concerns.

In contrast, zkEVM allows for the execution of transactions in a more secure and efficient manner by allowing for the verification of transactions without revealing any sensitive information. This not only improves the privacy of transactions on the network but also allows for greater scalability by allowing for the parallel execution of multiple transactions without compromising the security of the network.

### ****The different types of ZK-EVMs****

According to [Vitalik Buterin's](https://vitalik.ca/general/2022/08/04/zkevm.html) taxonomy of zkEVM types, there are five types of zkEVMs

1. **Type 1 zkEVMs:** These zkEVMs are fully equivalent to Ethereum and do not make any changes to the Ethereum system. They are fully compatible with all Ethereum-native applications but may have longer proving times for generating zero-knowledge proofs.
2. **Type 2 zkEVMs:** These zkEVMs aim to be fully EVM-equivalent and compatible with existing Ethereum applications. They make minor modifications to make proof generation faster and development easier. However, current implementations of Type 2 zkEVMs are still considered to be too slow.
3. **Type 2.5 zkEVMs:** These zkEVMs are EVM-equivalent except for gas costs. They aim to maintain compatibility with the EVM while making specific changes to improve proof generation and development ease.
4. **Type 3 zkEVMs:** These zkEVMs depart from the EVM and may sacrifice some EVM features to enable easier application development. They prioritize the ease of placing an EVM-like system within ZK-rollups and may have minor differences in how they treat contract code, memory, or stack.
5. **Type 4 zkEVMs:** These zkEVMs are fully compatible with ZK-rollups but may not be EVM-compatible. They may have different execution environments, state trees, or other features that make them more optimized for ZK-rollups.

It's important to note that some projects may be in the process of transitioning between types or improving their implementations, and the development of zkEVMs is still ongoing

### **Who’s building zkEVM rollups?**

Several projects are working on building zkEVM rollups, which are zero-knowledge rollups that are compatible with the Ethereum Virtual Machine (EVM) and can execute smart contracts. Here are some of the most promising projects in this field:

- **[Applied ZKP](https://github.com/privacy-scaling-explorations/zkevm-specs)** *is a project funded by the Ethereum Foundation to develop an EVM-compatible ZK-rollup and a mechanism for generating validity proofs for Ethereum blocks.*
- **[Polygon zkEVM](https://polygon.technology/solutions/polygon-zkevm)** *is a decentralized ZK Rollup on the Ethereum mainnet working on a zero-knowledge Ethereum Virtual Machine (zkEVM) that executes Ethereum transactions in a transparent way, including smart contracts with zero-knowledge-proof validations.*
- **[Scroll](https://scroll.io/blog/zkEVM)** *is a tech-driven company working on building a native zkEVM Layer 2 Solution for Ethereum.*
- **[ZKSync](https://docs.zksync.io/zkevm/)** *is an EVM-compatible ZK Rollup being built by Matter Labs, powered by its own zkEVM.*

Overall, zkEVM represents an exciting development in the field of Ethereum scaling and has the potential to greatly improve the performance and security of the network. By leveraging the power of zero-knowledge proofs, zkEVM allows for the efficient and secure execution of transactions, paving the way for a more scalable and secure Ethereum network.

How it Works and Why it's Crucial for Blockchain Technology

zkEVM.jpg

The Power of zkEVM

### Simply Explained

Account Abstraction is a big improvement for cryptocurrencies, making them easier to use for everyone, not just for tech experts.

Let's think about how things used to be when the internet started. When you wanted to create an account on a website, you had to ask someone to make a special record for you with a username and password. It was a bit complicated. But then, people found a way to make it easier. They created systems where you could automatically create your own accounts and even reset your password if you forgot it.

Now, something similar is happening with cryptocurrencies. Account Abstraction is a new idea that will make using cryptocurrencies more user-friendly. It's like the next step in the evolution of the internet. It will allow you to do things with cryptocurrencies without needing to understand all the technical details.

### Technically Speaking

Ethereum Account Abstraction refers to a proposed upgrade to the Ethereum blockchain protocol that aims to enhance the flexibility and capabilities of smart contracts and account management.

In the current Ethereum architecture, there are two types of accounts: externally owned accounts (EOAs) and contract accounts. EOAs are controlled by private keys and can initiate transactions, while contract accounts are controlled by smart contracts and execute predefined codes.

With Account Abstraction, the goal is to enable more advanced functionalities by allowing smart contracts to directly control and manage their own accounts. This means that smart contracts would be able to hold and manage Ether (the native cryptocurrency of Ethereum) and interact with other contracts, similar to how EOAs currently operate.

By introducing Account Abstraction, developers would have greater flexibility in designing complex decentralized applications (DApps) and implementing more sophisticated logic within smart contracts. It would enable the creation of new types of accounts, such as privacy-focused accounts or accounts with multi-signature capabilities, expanding the range of possibilities for decentralized applications on the Ethereum platform.

Account Abstraction is still a proposed upgrade and is being actively researched and developed within the Ethereum community. It is part of the ongoing efforts to improve the scalability, privacy, and functionality of the Ethereum network.

### Key Components of Account Abstraction:

**Smart Contracts:** Smart contracts are self-executing agreements with predefined rules and conditions. In the context of account abstraction, smart contracts gain the ability to hold, send, and receive funds autonomously.

**Virtual Machines:** A virtual machine (VM) executes smart contracts and facilitates the processing of transactions on the blockchain. Account abstraction requires a VM that supports the necessary functionalities for interacting with funds.

**Gas Model:** Most blockchain systems employ a gas model to allocate computational resources and prevent abuse. Gas is a unit of measurement representing the computational effort required to execute operations on the blockchain. Account abstraction involves considering gas costs associated with contract execution and fund management.

### Some Problems Account Abstraction seeks to solve

1. **Simplifying Fee Payments:**
Traditional wallets require users to have a certain amount of Ether (ETH) in their wallets to cover transaction fees. This creates friction when users want to send other tokens, such as USDC, as they need to ensure they have enough ETH to pay for the fees. This inconvenience is in contrast to traditional payment systems, where users don't have to worry about the underlying currency required for transactions. Account abstraction addresses this issue by abstracting away the need for users to manage separate currencies for transaction fees, creating a smoother experience similar to traditional payment rails.
2. **Enhanced Security and Asset Recovery:**
One of the concerns for cryptocurrency users is the permanent loss of assets if they lose their private keys. Unlike traditional banking, where password recovery options exist, losing access to a private key can result in irreversible loss. Account abstraction acknowledges the importance of risk mitigation and aims to provide enhanced security features. By implementing mechanisms for key recovery or alternative access methods, account abstraction offers users a sense of security, potentially outweighing the inconveniences associated with slower transfer times and lower interest rates.
3. **User-Friendly Approach:**
Cryptography concepts, such as seed phrases, private keys, public keys, and addresses, can be complex and intimidating for non-technical users. Account abstraction aims to bridge this knowledge gap by simplifying the user experience. With account abstraction, users can interact with their wallets without the need for in-depth understanding of cryptography. This eliminates the unrealistic expectation of non-technical consumers having to learn and secure their keys, making cryptocurrency adoption more accessible to a wider audience.
4. **Advancing User Experience:**
Account abstraction goes beyond the limitations of standard private keys or seed phrases. It allows for the implementation of arbitrary and complex logic within wallets, enabling a more intuitive and user-friendly experience. By combining the comfort of traditional financial systems with the speed and efficiency of blockchain technology, account abstraction paves the way for a significant improvement in user experience. This transformation in user experience is a crucial step towards onboarding the world to Web 3.0 and driving widespread cryptocurrency adoption.

### Benefits of Account Abstraction:

1. **Enhancing User Experience and Security:**
Account abstraction offers significant enhancements to the user experience by simplifying the onboarding process and bolstering security measures. Users can easily create accounts through smartphone apps, utilizing convenient biometric authentication methods such as fingerprint or face scanners. This eliminates the complexity of seed phrases, making cryptocurrencies more accessible to a broader audience. Moreover, smart accounts leverage the secure element in smartphones' hardware security modules to store cryptographic keys, thereby enhancing the security of funds. With additional security measures like two-factor authentication and spending limits, smart accounts provide robust protection for users' assets.
2. **Improving Transaction Efficiency:**
Smart accounts bring forth a range of features that enhance transaction efficiency. Two-factor authentication, implemented through smartphone apps or hardware wallets, adds an extra layer of verification for high-value transactions, ensuring enhanced security. Monthly spending limits empower users to exert better control over their financial activities. Session keys enable automatic approval of low-value transactions, facilitating seamless interactions with blockchain-based games and applications. Additionally, smart accounts support decentralized recovery options, enabling users to regain control of their accounts in case of loss or theft, without compromising the security of their funds.

### How will account abstraction be implemented?

Implementation strategies for account abstraction are still being explored and developed. While the concept of account abstraction holds promise, it's important to note that the specific implementation details may vary.

Currently, the Ethereum Virtual Machine (EVM) does not natively support smart contract wallets or account abstraction. To work around this limitation, developers have created smart contract wallets by adding complex code around standard Ethereum transactions. These wallets rely on off-chain processes and intermediaries, such as relayers, to translate user-signed messages into regular Ethereum transactions.

However, there are ongoing discussions within the Ethereum community to enable account abstraction at the protocol level. The idea is to allow smart contracts to directly initiate transactions, eliminating the need for external processes. By shifting the necessary logic into Ethereum smart contracts, the network's decentralization would increase as it removes reliance on relayers operated by wallet developers.

While the implementation details and timeline for account abstraction on Ethereum are not yet finalized, the Ethereum development community is actively exploring ways to enhance the capabilities of smart contracts and address the challenges associated with smart contract wallets.

It is crucial to refer to official Ethereum documentation, updates, and announcements from the [Ethereum Foundation](https://ethereum.org/en/roadmap/account-abstraction/#how-will-aa-be-implemented) and relevant Ethereum Improvement Proposals (EIPs) to stay informed about the progress and official plans regarding the implementation of account abstraction on the Ethereum network.

### Challenges and Considerations:

Security: Account abstraction requires robust security measures to protect against vulnerabilities such as reentrancy attacks, unauthorized fund access, and code bugs that could lead to unintended consequences.

Gas Optimization: Account abstraction introduces additional complexities in gas estimation and optimization. Developers need to carefully consider gas costs to ensure efficient contract execution and minimize transaction fees.

Scalability: Implementing account abstraction on a large scale can pose scalability challenges. Designing efficient and scalable VMs is crucial to handle the increased workload resulting from complex smart contract interactions.

### Smart Accounts Use Cases

Smart accounts, enabled by account abstraction technology, introduce a range of innovative use cases let's explore some.

1. **Simplified Subscription Management:**
With smart accounts, users can set up conditional pull payments for their subscriptions. For instance, an electricity company could create an auto payment smart contract on its website, specifying the frequency and maximum amount for monthly charges. Users can then approve these conditional pull payments through their smart accounts, allowing for automated bill payments as their funds are deposited into the wallet. This eliminates the hassle of manual initiation of "push" transactions for each bill, making subscription management effortless.
2. **Enhanced Security and Control:**
Unlike traditional payment methods that require users to trust centralized services, smart accounts empower individuals to retain control over their funds. Transactions initiated from user accounts require user approval and signature, ensuring that payments are made only when the user authorizes them. This level of security and control eliminates the need to rely on third-party intermediaries, reducing the risk of unauthorized transactions or data breaches.
3. **Seamless Integration with Existing Services:**
Smart accounts can seamlessly integrate with existing subscription-based services, providing users with a familiar and convenient payment experience. Users can set up their smart accounts to automatically send funds matching the subscription amount for a given period. This automation streamlines the payment process, eliminating the need for manual intervention, and ensuring uninterrupted access to services.
4. **Expansion of Payment Applications:**
The introduction of smart accounts opens up a host of new payment applications within the cryptocurrency ecosystem. Users can script their smart accounts to enable a variety of payment scenarios, similar to those seen in traditional Web2 services. For example, users can effortlessly purchase subscriptions, make regular donations, or fund recurring expenses directly from their smart accounts. This expands the utility of cryptocurrencies, providing users with more options to utilize their funds effectively.

### Conclusion

Account abstraction enables many more opportunities for building better crypto wallets by leveraging the power of account abstraction, wallets can deliver a more seamless and intuitive experience, bridging the gap between traditional finance and the efficiency of blockchain technology. This advancement is a vital catalyst for accelerating the adoption of cryptocurrencies and ushering in the era of Web 3.0.

References and Further Reading 

- Ethereum Improvement Proposal (EIP) 2938: **https://eips.ethereum.org/EIPS/eip-2938**
- [Vitalik's "Road to Account Abstraction" notes(opens in a new tab)](https://notes.ethereum.org/@vbuterin/account_abstraction_roadmap#Transaction-inclusion-lists)
- https://ethereum.org/en/roadmap/account-abstraction/

Worthy Watches

- [Account abstraction panel discussion from Devcon Bogota(opens in a new tab)](https://www.youtube.com/watch?app=desktop&v=WsZBymiyT-8)
- ["Why account abstraction is a game changer for dapps" from Devcon Bogota(opens in a new tab)](https://www.youtube.com/watch?v=OwppworJGzs)
- ["Account abstraction ELI5" from Devcon Bogota(opens in a new tab)](https://www.youtube.com/watch?v=QuYZWJj65AY)

Learn how Ethereum Account Abstraction is making interaction with crypto easier for everyone.

Ethereum Account.jpg

Ethereum Account Abstraction


Cryptocurrency transactions are a vital part of the digital economy, allowing individuals and businesses to transfer digital assets across the globe with ease. However, the decentralization and anonymity of blockchain technology can also create vulnerabilities, making it easier for malicious actors to engage in fraudulent activity.

To combat this, Bitpowr, a blockchain infrastructure provider, has introduced a new system to validate transactions, prevent fake transactions and improve the overall security of working with digital assets transactions.

At its core, Bitpowr's system works by using a combination of indexing and tracking to monitor cryptocurrency transactions in real-time from new blocks produced or any unconfirmed transactions present in the Mempool.

When a transaction is initiated and present in the Mempool or a block, the system immediately tracks and indexes it, allowing it to be validated against a series of rules and criteria to ensure that it is a legitimate transaction.

One of the key components of Bitpowr's transaction monitoring system is the use of indexers to index and track transactions as they occur, decode each transaction's data, and validate the information decoded. 

These indexers primarily monitor each block produced, index the block transactions, and scan through them in real time for transactions related to a specific address. This allows us to detect transactions related to addresses as soon as they occur and prevents transactions from slipping through undetected.

In addition to the monitoring system, Bitpowr introduces a new system that includes a series of validation rules that are applied to each transaction. 

These rules are designed to identify common signs of fraudulent activity, such as transactions that involve suspicious addresses (OFAC sanctions or chain abuse reports), suspicious or dangerous methods like (_approve_), invalid transaction status, and transaction confirmations.

If a transaction is flagged by the validation rules, it is immediately halted and flagged for further review, preventing it from initiating a notification to the customer's webhook.

Finally, once a transaction has been validated and confirmed, Bitpowr sends a webhook notification to the customer indicating that the transaction has been processed successfully. This notification includes detailed information about the transaction, including the amount transferred, the destination address, and the time and date of the transaction.

**Some of the methods that Bitpowr uses to validate transactions include:**

**Transaction Confirmation**: This involves checking whether the transaction has been confirmed by the blockchain network. In general, it's recommended to wait for at least 6 confirmations before considering a transaction as fully validated. Bitpowr scan transactions from 0 confirmation up to 6 confirmation.

**Transaction Validity**: Each transaction has a unique hash associated with it, which can be used to confirm that it has been added to the blockchain and not failed or reverted. By validating the hash, Bitpowr ensures that the transaction is legitimate and has been successfully processed.

**UTXO Outputs Validation**: For UTXO-based blockchains like Bitcoin, Bitpowr validates the output to ensure that the address, amount, and index match what was expected. This ensures that the transaction is sending the correct amount to the correct address.

**EVM Input Metadata Validation**: For Ethereum-based blockchains that use the EVM (Ethereum Virtual Machine), Bitpowr decodes EVM and TVM inputs data, validates each detail such as the ERC-20 token amount, contract address, contract method, and other vital information to ensure that the transaction is legitimate. Bitpowr also checks for the status of the transaction ensuring it was not rolled back or failed on the chain.

**AML Scan**: Bitpowr also performs additional checks by scanning addresses against databases like the Office of Foreign Assets Control (OFAC) and ChainAbuse to ensure that they are not associated with fraudulent or illegal activities. This provides an extra layer of security, helping to prevent transactions with known bad actors and reducing the risk of fraud and other malicious activities.

By combining these methods, Bitpowr is able to validate transactions in real-time, preventing fraudulent activity and ensuring that customers receive accurate and reliable notifications about their transactions. This approach helps to build trust and confidence in the blockchain network, making it easier for individuals and businesses to transact with confidence in the digital economy.

Overall, Bitpowr's system for validating transactions to prevent invalid or fake transactions is an important step forward in improving the security and reliability of cryptocurrency transactions. As the digital economy continues to grow, solutions like Bitpowr's will become increasingly important for ensuring the safety and security of digital assets.

Bitpowr, a blockchain infrastructure provider, has introduced a new system to validate transactions, prevent fake transactions and improve the overall security of working with digital assets transactions.

Validation Layer.jpg

Introducing Bitpowr Transaction Validation Layer

##### How Secure MPC Protects Custody Wallets?

Secure MPC is a branch of cryptography that tries to create methods that enable parties to jointly calculate a function over their inputs while preserving the privacy of those inputs. In contrast to traditional cryptographic tasks, where the adversary is an outsider (an eavesdropper on the sender and receiver), and cryptography maintains the security and integrity of communication or storage, the cryptography in this paradigm protects participants' privacy from one another.

The following characteristics help MPC achieve outstanding key security:

1. Throughout the entire lifecycle of a key, Secure MPC never generates a full private key on any machine, at any time. Keys are instead created by secure MPC in the form of distributed key shares, spending their entire existence within the bounds of the system on which they were created. This attribute sometimes referred to as “keyless” eliminates many vulnerabilities that have to do with key generation, key distribution, key storage, and key destruction.


2. Secure MPC runs entirely off-chain from the blockchain technology used by any digital asset. In contrast, alternative multiparty approval schemes such as MultiSig run on-chain.

The benefit of an off-chain scheme is that a change to a security policy, such as an approver or the number of approvers, is not recorded on the blockchain, decoupling key management from the underlying ledger technology. This eliminates the electronic breadcrumb trail that can provide would-be hackers with insight into your security policies or update practices. Reducing this electronic footprint increases privacy and reduces overall security risks.


3. While Secure MPC runs off-chain, the application can still provide a full record of exactly which parties participated in the approval of any transaction, as well as all other security audit records. This approach retains full audit and accountability enforcement which is essential for any effective security scheme


4. Secure MPC natively supports multiparty approval models. Each party in possession of a key share acts as an MPC approver. The practice of requiring multiple MPC approvers mitigates the risk that an internal bad actor gains access to a full key and uses it fraudulently. Secure MPC systems can be designed to require multiple parties or quorums of parties to satisfy their security and compliance policies before an MPC party grants their approval and generates a partial signature. It can also be designed to mandate that certain parties be required for any m of n quorum approval schemes.


5. MPC can continue dependable operations, with privacy and accuracy, in the presence of different attacks. As a result, lawful transactions are signed even if a third party tries to thwart them by purposefully generating an incorrect signature. When a threat actor is present in the trusted environment, almost all alternative security techniques become inoperable or useless.


6. Secure Signature Generation: Secure MPC allows each party to use their share of a key to generating a partial signature within the machine securing the key share. The key share is never accessed by or presented to any other system to generate the partial signature, so the key share never leaves the party’s machine. The partial signature is then exported from the machine. When enough parties have generated and exported partial signatures they are combined to create a full signature. Through this process, the key share is never disclosed to any other party and never leaves the security of the machine on which it was created.


7. Private keys are binary numbers, and hexadecimal strings are frequently used to represent them in key share rotation (or refresh) systems. Secure MPC key shares are just various mathematical combinations that are utilized as inputs to a joint computation to equal the value of the cryptographic private key. The combination of key shares, each of which stands for a certain number, can be altered whenever necessary without altering the private key itself.

A malicious actor is less likely to compromise enough key sharing parties' machines to steal the key by rotating or updating these key values. The use of an automated key sharing renewal depends on the desired MPC security model. Without altering the actual public-private key pair, secure MPC key shares offer key share rotation.


8. Since no full key ever exists in any form, on any machine, there is no digital memory of a key that could be harvested from previously used machines. As a result, the theft, misplacement, or retirement of mobile phones, laptops, desktops, servers, virtual machines, or containers that once hosted a key share cannot be mined to derive a full key.

Bitpowr offers an MPC-based wallet service to help you manage your digital assets, and accept crypto payments.  [Contact sales](https://www.bitpowr.com/contact#contact) to get started!

Also check out [our documentation](https://docs.bitpowr.com/docs) here 

## References

[Secure multi-party computation Wikipedia](https://en.wikipedia.org/wiki/Secure_multi-party_computation)

[MPC Alliance](https://www.mpcalliance.org/blog/an-introduction-to-secure-multiparty-computation-for-digital-asset-custody-wallets)

[Scalable and Unconditionally Secure Multiparty Computation](https://www.iacr.org/archive/crypto2007/46220565/46220565.pdf)

[Securing Digital Assets Under Custody](https://sepior.com/resources)

[Sepior MPC](https://sepior.com/blog/secure-multiparty-computation-mpc-for-digital-asset-custody-wallets)

Secure MPC is a branch of cryptography that tries to create methods that enable parties to jointly calculate (read more)

bi05;10.jpg

How does "Secure MPC" Protect Custody Wallets?

#### **MPC vs Multi-sig Wallets: Which is best for your Business**


With fiat currency and paper notes, you can keep all of your money in a single wallet, even if you have 10 different currencies. On the flip side imagine getting separate wallets for Dollars, one for Naira, and another for Euros, that would be weird.

The same analogy goes for cryptocurrency, the burden of remembering different [seed phrases](https://academy.binance.com/en/glossary/seed-phrase) for multiple wallets, managing multiple accounts, and all the security considerations required. it would be a difficult experience juggling these many wallets and digital assets. With Bitpowr’s Multi-Party Computation (MPC) based wallet it becomes a walk in the park. Some will argue that Mutisig wallets are better, in this post, we will cover the advantages MPC wallets have over on-chain multisig for organizations managing digital assets.

Build your blockchain business for scale, Secure your assets in a tested and trusted Wallet architecture. Button: Start Now

 

#### **What is a Multisig Wallet?**

Multisig stands for "Multi-signature," a particular kind of digital signature that enables two or more people to sign a document as a group. This adds an additional layer of security to your wallet compared to a single signature wallet which can easily be hacked.

 

#### **What is a Multiparty computation(MPC) wallet?**

MPC wallets, or multiparty computation wallets, are similar to Multisig Wallets but designed to provide the highest level of security to companies, banks, and governments looking to Manage their digital assets.

To better understand it, consider an MPC wallet to be a common wallet, with the exception that the passwords and control of these devices are stored on different devices. Each of the devices that store the keys has a key that, when combined with the others, allows the funds to be used.

 

#### **The Challenge with Multi-sig Wallets**

Prior to Multisig wallets, cryptocurrencies were typically held using just one private key. The funds linked to a private key could be accessed by anyone with access to the private key itself. With multi-sig came an additional layer of security to the system. While Multisig wallets solved problems of single-signature wallets,  they also introduced new issues; The main one being that Multi-signature wallets are not compatible with all crypto protocols. So, multi-signature wallet providers experience many issues in supporting new chains securely.

On the other hand, it is very slow as Wallet providers must implement different codes for each on-chain multi-signature solution.

In a nutshell, Multi-signature-based solutions are no longer able to meet the demands of a digital asset business in today's rapidly evolving environment, with hundreds of cryptocurrencies and Blockchains.

 

#### **Benefits of Using MPC over Multisig**

**1. MPC supports multichain**

**The Multisig challenge:** More digital assets than ever are distributed across an increasing number of blockchain networks. Only a selected minority of these networks, like Bitcoin and Ethereum, have the technical ability to enable complex multi-signature schemes. They only support assets linked to that particular chain because the signature takes place on-chain.

For instance, Bitcoin Multisig only accepts BTC, whereas Ethereum Multisig only supports  Ethereum-based currencies. This implies that you will require several signature solutions if your business deals with a large variety of digital assets.

**The MPC Advantage:** In comparison to Multisig, [Bitpowr MPC wallet](https://www.bitpowr.com/) manages many assets for you on a single platform as opposed to juggling multiple signature systems. Presently the Bitpowr MPC wallet is compatible with Bitcoin, Ethereum-based assets, and will eventually support more digital assets across all blockchains.

**2. Flexibility**

**The Multisig challenge**: Onchain multisig is rigid, which makes it challenging for big digital asset businesses to scale. Fixed approval quorums are one of the main issues. To keep assets secure, signing methods must be continuously modified when new employees are employed and old ones are let go. However, as soon as an onchain multi-sig wallet is made, the approval quorum cannot be changed.

Therefore, in order to change the signature scheme and add or remove a cosigner, you must first create a new wallet, then pay network fees to transfer the funds, and finally inform all of your trading counterparties of the new address. Otherwise, you run the risk of them sending money to the wrong location!

**The MPC Advantage:** With Bitpowr MPC wallets, approval quorums are quickly adjusted to meet changing organizational requirements. Therefore, you can keep the same address rather than having to shift the full amount each time a cosigner is added or withdrawn, which would lessen the operational load and decrease the possibility of catastrophic errors like; large-scale data leakage,

**3. Ease of Administration**

**The Multisig challenge**: MPC gives you more control over governance than simply deciding how many employees must sign a transaction.

**The MPC Advantage:** You can assign an unlimited number of transaction approvers to a policy, and also delegate a variety of permissions that correspond to real-world organizational roles, such as administrators who can edit approval schemes and traders.

**4. Low Gas fees**

**The Multisig challenge**: The majority of blockchains charge network fees based on the number of onchain operations required to complete a transaction. As a result, the more people involved, the more expensive it is to carry out.

Bitcoin and Ethereum, for example, support simple multi-signature transactions. However, the added complexity of having multiple participants makes them much more computationally intensive, doubling or tripling the transaction cost.

**The MPC Advantage:** MPC-based wallets will never have fees that are higher than an ordinary transaction on the underlying chain, regardless of the number of signers involved.

**5. Faster transactions**

**The Multisig challenge**: Blockchains encounter a lot of network congestion, which pushes up transaction fees and poor processing rates. Additionally, as miners attempt to fit as many transactions as possible into each block, Multi-sig transactions are more likely to be put last because they take up more space and are larger due to the additional metadata they contain. Delays therefore cannot be avoided unless you are willing to pay more for expedited processing.

**The MPC Advantage:** In contrast, decentralized MPC does not rely on additional calculations made on the underlying chain. Instead, the signature calculation is done on the  Network, and then just one small transaction is sent to the blockchain, avoiding long wait times and exorbitant transaction costs.

 

#### **Conclusion**

Are you ready to reap the benefits of Bitpowr MPC Wallets? We are delighted to[ hear from you](sales@bitpowr.com) and discuss how Bitpowr can help you manage your crypto assets safely. 

Check out [our documentation](https://docs.bitpowr.com/docs) to learn more about our wallet services and other related products.
[Contact sales](https://www.bitpowr.com/contact#contact) or send an email to sales@bitpowr.com to get started!

Bitpowr MPC wallet manages many assets for you on a single platform (read more)

July6th article.jpg

MPC vs Multi-sig Wallets: Which is best for your Business

#### **What is Multiparty Computation (MPC)**

Wallets are to digital assets what air is to life; the former supports the latter. A digital asset lives in a wallet so to speak, they help to store and manage our cryptocurrencies securely. 

*One of the most secure wallets currently available is the Multiparty Computation Wallet.*

 

### **What exactly is Multiparty Computation?**

Multiparty Computation (MPC) is a cryptography technology that enables a group of different data owners to jointly compute a function of their private inputs, without requiring them to share their private data with one another or any other party. For a digital asset custody wallet like [bitpowr](https://www.bitpowr.com/solution/wallet), the “different data owners' ' are the multiple parties that hold a share of a private key and use those key shares to provide their part of a multiparty approval of a transaction. Their “joint computation” generates a single digital signature to release digital assets for transfer to a third party.

 

#### **A brief history of Multiparty Computation**

The concept of multiparty computing emerged in 1970. Historically it has mostly been used to hide information. Modern cryptography uses math and computation to encrypt and decrypt messages or to guarantee the authenticity of the information. Today, this technology is currently found in a variety of smartphones and computer chips.

The idea to create multiparty comes from the need for a technology in which security models could be enabled where a variety of parts are required to access the system. Each of the parts allows the system to be unlocked, depending on the level of access. It was not until 1990 that this concept came to life thanks to [David Chaum](https://blog.bitnovo.com/en/who-is-david-chaum/), a pioneer in the cryptographic world who presented an elaborate paper on this protocol. The paper was called “**Unconditionally Secure Multiparty Protocols''**.

 

#### **How does the Multiparty Computation technology work?**

 

The operation of an MPC Wallet is divided into three essential parts: **key generation, address generation, and access to funds**. In the following paragraphs, we will see what each one consists of in detail.

 

#### **1. Generate Key**

This is the mechanism with which the wallet generates private and public keys and it also creates the registration of the private and public keys for the wallet's locking mechanisms.

This is how the unlocking devices generate a pair of public and private keys. They are then combined with those of the other devices to generate the MPC wallet's private and public keys. This scheme attempts to distribute wallet control in a simple and similar manner to prevent a hacker from taking control of the wallet.

It should be noted that these keys are generated by a **protocol** defined by a very simple mathematical formula: **nF(d1, d2, d3) = max(d1, d2, d3).**

You may be thinking that this formula is too **complicated** and difficult to understand, however, it simply means that each participant has in its possession private data that would be from **d1, d2…dN**. Thanks to this private data, by using a public function called F we can calculate how much the private data is worth as well as enable the use of the wallet. For this, we use the cryptographic signature algorithm which can be either **ECDSA, EdDSA, Schnorr**, or any other compatible one. If we add all these private data we obtain as a result a cryptographic reason that provides access to the wallet.

#### **2. Generate Address**

In this case, MPC wallets are very similar to the ones we already know, like Multisig wallets. Either party can request to generate a public key. The generated address can then be used to receive funds.

This is possible thanks to asymmetric cryptography. The security of sharing the public key is due to the complexity of performing the process opposite to the generation of the public key. It is, therefore, safe to generate public keys for each member.

As for the private key, the goal of the MPC wallet is to keep the private key divided among several devices to avoid easy balance control.

#### **3. Access to funds**

In order to access the funds, **the conditions determined** during the creation of the MPC wallet must be fulfilled. If four devices with private data were entered during generation, these four devices must be present to **access** the wallet.

To protect these devices, cryptographic systems, security modules such as **HSM** or other **security** features are often used. In fact, only originally paired devices will be able to access the **MPC wallet** and the **funds**.

 

#### Use cases MPC, including genetic testing and auctions.

As the necessity for information security increases along with digitalization, MPC is increasingly used to protect sensitive data by acting as a digital non-disclosure agreement restricting who can access what data. These are a few examples of its use case.

- MPC can be used in genetic testing to allow individuals to evaluate their own genetic profile without unintentionally disclosing to authorities or insurers how quickly they metabolize caffeine or how likely it is that they will develop diabetes.
- MPC can be used in sensitive research to safely gather and analyze data such as financial and medical information—without requiring people to divulge private information to a third party.
- MPC can be used in sealed-bid auctions to guarantee that each bid entered concurrently remains totally secret.

 

### Future Expectations for secure MPC.

MPC has rapidly established itself as the industry norm for protecting digital assets. Major financial organizations like Revolut, the biggest neobank in Europe, are switching to MPC. Other applications of MPC  include off-exchange matching, privacy-preserving statistics, and cloud private key management.

In the near future, multi-party computation will also have a big impact on things like Data-as-a-Service solutions, databases, cryptographic data security, etc.

The [Bitpowr MPC-based wallet](https://www.bitpowr.com/solution/wallet) helps your business scale much more rapidly and easily due to its blockchain agnostic nature and adaptability to unforeseen developments like blockchain forks, larger client bases, and technological advancements.

Do you have any questions or inquiries on how to get MPC wallets for your business?  [Talk to us](https://www.bitpowr.com/contact#contact)

The concept of multiparty computing emerged in 1970. (read more)

Bitpowr MPC ARTICLE (1).jpg

 What is Multiparty Computation (MPC)

#### **Bitpowr Wallet now Supports Bitcoin SegWit Addresses**

Before now, Legacy addresses were the original BTC addresses, now SegWit addresses are the newer address format with lower fees.

SegWit stands for Segregated Witness, where Segregated means to separate and Witness refers to the transaction signatures involved with a specific transaction. In a nutshell, it is an improvement over the current bitcoin blockchain in that it reduces the size required to store transactions in a block.

*Not all wallets support SegWit; if you use one that doesn't, you won't be able to send Bitcoin to a native SegWit address (starting with "bc1"). Moreover, compared to someone who utilizes a SegWit Bitcoin wallet, you will always pay more in fees. However, you can always use our Wrapped SegWit Address which solves the compatibility issues.*

 

#### **Why use SegWit addresses**



**1. Reduced transaction speed**

SegWit has the potential to increase transaction speed, which helps to reduce transaction costs in the Bitcoin network because more transactions can be recorded in a single block. Prior to SegWit, transaction fees could amount to more than $30. However, SegWit has significantly reduced that cost to less than $1 per transaction.

**2. Fixing transaction errors is simple.**

A significant problem with Bitcoin was the possibility of tampering with transaction signatures. A transaction between two parties may become tainted and be recorded on the blockchain forever if a signature is compromised.

Segwit eliminates the signatures from the transaction data, making it impossible to change this data. Additional blockchain community innovation, such as second-layer protocols, and smart contracts has been made possible by this update.

**3. Backward Compatibility**

Another advantage of SegWit is that it is backward compatible, which means you can send money from a SegWit address to a Legacy address or Wrapped Segwit address.

 

#### **How you can use SegWit addresses on Bitpowr**

It is now possible to generate Native SegWit addresses on Bitpowr in order to send and receive money over the Bitcoin network through our Dashboard and API .

 

**Bitpowr Dashboard**

It is very simple to get started on the Bitpowr Dashboard, First thing is to set up an account.

<img src="https://res.cloudinary.com/samvwede/image/upload/v1656418600/New_Account_8b2dd53f05.png" style="max-width:90%;"/>


After which you Select the type of wallet you want to use either Self custody or a custody wallet.


<img src="https://res.cloudinary.com/samvwede/image/upload/v1656418600/choose_wallet_a587154ef2.png" style="max-width:90%;"/>


Then you can select New asset, only Bitcoin and Litcoin have SegWit support on Bitpowr for now

<img src="https://res.cloudinary.com/samvwede/image/upload/v1656418600/New_Asset_e26bd9aa56.png" style="max-width:90%;" />


Click on view more to navigate into the Bitcoin assets

<img src="https://res.cloudinary.com/samvwede/image/upload/v1656418600/Bitcoin_Asset_a318501807.png" style="max-width:90%;"/>


Click on the Addresses tab, then click on the New address button. As you are creating the address, confirm the address you want to use is SegWit.

<img src="https://res.cloudinary.com/samvwede/image/upload/v1656418600/Create_Seg_Wit_account_5bd33b70b1.png" style="max-width:90%;"/>


SegWit address is automatically created and you can send and receive funds instantly.

 

**Bitpowr API**


To use the SegWit address through the Bitpowr API, you will need to have access to your API Keys. You can always get the API Key from the dashboard.

There are two ways to use SegWit addresses via API:

**1. Generating Address**: You can easily do that from the generate new address endpoint by passing `addressType` as `segwit` or `wrappedsegwit` to either generate a native SegWit address or wrapped SegWit addresses. This is default to `legacy` and for compatibility use the `wrappedsegwit` . You can look at the docs [here](https://docs.bitpowr.com/docs/address).

**2. Transaction Change Address**: When creating transactions for **Bitcoin** and **Litecoin**, you can pass in `changeAddressType` as `segwit` or `wrappedsegwit` to be able to use SegWit addresses as a change address. See [here](https://docs.bitpowr.com/docs/transactions).


#### **Closing**

In relation to scale, the introduction of SegWit was a significant step toward resolving many issues with Bitcoin and other blockchain networks. Blockchain networks are able to process more transactions more quickly and cheaply by combining SegWit with the second-layer protocols.

This also serves as a commitment to provide better solutions and features to help reduce transaction fees.

Check out [our documentation](https://docs.bitpowr.com/docs) to learn more about our wallet services and other related products. 
[Contact sales](https://www.bitpowr.com/contact#contact) or send an email to sales@bitpowr.com to get started!

On Bitpowr, it is now possible to create Native SegWit addresses to send and receive money (read more)

segwit.jpg

Bitpowr Wallet now Supports Bitcoin SegWit Addresses

The Bitpowr Safe Contract is a non-custodial smart contract wallet designed to minimize transaction fees and simplify onboarding users to web3 applications with support for multiple chains.

Most EVM chain wallets are typically controlled by a single private key. Each address generated is associated with an account and a corresponding private key for fund access.

However, the Bitpowr Safe Contract introduces a unique approach. It allows for the deployment of a distinct smart contract wallet for each user, which can be controlled by either a deployer's private key, multiple private keys, or individual users' private keys. This offers more control over user onboarding and transaction fee management.

The Bitpowr Safe Contract utilizes the **`create2`** method to generate gasless on-chain wallet addresses, which can be deployed when users deposit funds into the address or at any time.

### **Benefits**

1. **Multi-Chain Support**: Ethereum, Polygon, Binance Smart Chain, Tron.
2. **Custodial & Non-Custodial**: The Bitpowr Safe Contract can be operated as both a non-custodial wallet or a custodial one, depending on the preferences of the deployer.
3. **Fee Abstraction**: Deployers can cover the transaction fees. Fees are only incurred when users deposit funds, allowing flexibility in fee management.
4. **Batch Transaction**: Support for batch transferring multiple assets, including ERC20, ERC721, and ERC1155 (work in progress).
5. **Flush**: Capability to flush tokens to the deployer's address.
6. **Auto Flush**: Native assets like ETH and MATIC are automatically flushed to the master address upon incoming deposits.

## **Network Support**

The Bitpowr Safe Contract is written in Solidity and is technically compatible with all EVM chains.

Currently supported networks:

1. Ethereum - Mainnet, Ropsten
2. Polygon - Mainnet, Mumbai
3. Binance Smart Chain - Mainnet, Testnet
4. Tron - Mainnet, Shasta

## **Gas & Transaction Fees**

The Bitpowr Safe Contract is a smart contract wallet designed to manage and abstract transaction fees, relieving users of this burden. Transaction fees are covered in native chain assets by the deployer or owner of the wallet.

### **Sending Out Transactions**

To initiate transactions, users need to call the smart contract's transfer command to execute on-chain transfers to the desired addresses. The cost of the transaction is the expense of calling this function, with gas fees incurred based on the gas required to execute the transfer method.

## **Getting Started**

### **Installation**

To start using the Bitpowr SDK, you can install it via npm or yarn:

```bash
bashCopy code
$ npm install --save @bitpowr/contract

```

or

```bash
bashCopy code
$ yarn add @bitpowr/contract

```

**Note**: An **`.npmrc`** file containing our private package registry configuration is required to install the package.

```less
lessCopy code
@bitpowr:registry=https://gitlab.com/api/v4/packages/npm/
//gitlab.com/api/v4/projects/26875049/packages/npm/:_authToken=<sdkToken>
//gitlab.com/api/v4/packages/npm/:_authToken=<sdkToken>

```

### **Wallet Contracts Comment**

There are two types of EVM chain wallets: Externally Owned Account (EOA) and Smart Contract Wallet. One is deployed on the blockchain, and the other does not require deployment.

Bitpowr Safe utilizes a smart contract wallet, which allows the implementation of custom functionalities, logic, and behaviors supported by the virtual machine.

Bitpowr employs factory contracts to clone contracts on-chain when deploying a new wallet, utilizing the **`create2`** method to generate feeless on-chain wallets.

Bitpowr Safe comprises two main contracts:

1. **AddressFactory**: The address factory facilitates address deployment, and predicts addresses using **`create2`**.
2. **Address**: The Address contract serves as the wallet deployed to manage user funds.

### **Address Factory**

The address factory is a factory proxy contract that aids in cloning and deploying contracts to an address generated uniquely via create2.

### **Methods**

1. **deployAddress**: Deploys a proxy contract to a uniquely generated address using a salt passed to the **`create2`** command. This method essentially clones and deploys a previously deployed contract to a new address.
2. **predictAddress**: Generates gasless smart contract addresses that can be provided to users without incurring a fee. This ensures that the predicted address is uniquely generated using the given salt and the owner's address, eliminating any address collisions.
3. **predictDeterministicAddress**: If you prefer generating a custom salt using a specific language, you can directly pass the salt to this function.

### **Address**

The Address contract is responsible for holding assets and executing on-chain transactions and operations. It automatically flushes incoming native assets to the deployer's/owner's address.

The deployer is, by default, the owner of the address, and ownership can be transferred to another address using the **`transferOwnership`** function.

### **Methods**

1. **getBalance**: Retrieves the balance of native and ERC20 assets.
2. **transferOwnership**: Transfers contract ownership to another address, typically the user's address.
3. **transfer**: Executes native and ERC20 transactions to another address, incurring gas fees only for calling the function.
4. **transferToMany**: Initiates transfers to multiple addresses in a single transaction, with the option to specify the ERC20 token for the transfer.
5. **flush**: Flushes native assets to the deployer's/owner's address.
6. **flushTokens**: Flushes a single ERC20 token to the deployer's/owner's address.
7. **flushMultipleTokens**: Flushes multiple ERC20 tokens to the deployer's/owner's address.
8. **enableAutoFlush**: Enables auto flush for incoming deposits of native assets.
9. **disableAutoFlush**: Disables auto flush for incoming deposits of native assets.
10. **changeTransferGasLimit**: Adjusts the gas limit for on-chain transfers.

## **Genesis Contracts**

Genesis contracts are templates deployed and stored on the blockchain, which can later be cloned on-chain to create additional contracts. These contracts are built on the Proxy and Factory Contracts. The **`Address`** and **`AddressFactory`** contracts are deployed to the blockchain as genesis contracts, enabling the generation of gasless addresses, contract deployment, and on-chain asset management while allowing individuals to retain control of their private keys. Bitpowr deploys these contracts on each supported chain, enabling users to clone these contracts on-chain while maintaining their private keys.

Discover the Bitpowr Safe Contract - a user-friendly smart contract wallet for digital assets. 

Our blog

Resources and insights

Bitpowr Safe Contract

The Power of zkEVM

Ethereum Account Abstraction

Introducing Bitpowr Transaction Validation Layer

How does "Secure MPC" Protect Custody Wallets?

MPC vs Multi-sig Wallets: Which is best for your Business

What is Multiparty Computation (MPC)

Bitpowr Wallet now Supports Bitcoin SegWit Addresses

Bitpowr Safe Contract

The Power of zkEVM

Ethereum Account Abstraction

Introducing Bitpowr Transaction Validation Layer

How does "Secure MPC" Protect Custody Wallets?

MPC vs Multi-sig Wallets: Which is best for your Business

What is Multiparty Computation (MPC)

Bitpowr Wallet now Supports Bitcoin SegWit Addresses

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