Article: Which is Better: MPC Wallet or Cold Storage Wallet in 2024?
Which is Better: MPC Wallet or Cold Storage Wallet in 2024?
Does anyone remember the 2023 IceWeasel exploit? Yeah, that was someone staring at the phone and watching our life savings in Meme coins vaporize like a Doge in a supernova. Yes, we’ve trusted hot wallets, but it turns out that convenience ain't worth the constant cold sweats.
Listen up, tech wizards, you need to forget the endless blockchain buzzwords for a while and dive into the real heart of crypto: security. We’re talking multi-party computation (MPC) wallets, and the familiar cold storage wallets. That is the ultimate showdown for your digital loot and how you can sleep tight.
But which one you should choose for crypto storage in 2024?
Is it the new kid on the block, MPC wallets boasting distributed private key magic and shared paranoia?
Or do you prefer the seasoned veteran, the cold storage wallet, offline and rugged as a crypto monk?
Now, it’s time to strap on your coding visors, grab your virtual coffee, and follow us to navigate the treacherous terrain of crypto storage, compare convenience and features, and ultimately find the best crypto wallet that deserves your digital riches.
In this guide:
- What is an MPC Wallet?
- What are Cold Wallets for Crypto Storage?
- MPC Wallets vs. Cold Storage Wallets
What is an MPC Wallet?
Well, before you make a decision, it's necessary to make MPC wallets explained first of all.
MPC wallets, or multi-party computation wallets, meaning a new type of digital cryptocurrency wallet that could be built in crypto phones use multi-party computation technology to distribute the private key among multiple parties. That’s to say, no single party has access to the entire private key, making it much more secure than traditional single-key hot wallets.
To make it more straightforward, let’s see a breakdown of how MPC wallets work:
- Split your private key into several secure shards leveraging advanced cryptography and distributed computing technology.
- Distribute these shards across multiple computing nodes with different entities.
- Calculations on each shard separately and collaborate using secure cryptographic protocols to generate necessary signatures for the transaction without key reconstriction and reveal.
One of the best parts of MPC wallets is the Threshold Security. Typically, MPC wallets require a certain number of nodes (e.g., 2 out of 5) to cooperate for your transaction to be authorized. This ensures that even if some nodes are compromised, your funds remain secure as long as enough honest nodes remain operational. If integrated with some additional elements including threshold signing schemes, homomorphic encryption, hardware security modules (HSMs), and Zero-knowledge proofs (ZKPs), some MPC wallets could become even more powerful and reliable than general hot wallets. As far as we know, the luxury phone giant, Vertu, has successfully applied encryption hardware with MPC wallets on its new flagship product—METAVERTU 2nd Generation Web3 AI Phone.
The popular METAVERTU is known for running three systems independently, in which the main Luxury OS is for your general life and work, and the second system (separately encrypted and managed by your specific fingerprint) is exquisitely designed for the web3 world and your MPC wallet. It means that you don't have to worry about your MPC wallet data being discovered, snooped on, or lost.
Since this is a newbie-friendly guide, we need to explain MPC in an easier way. Let’s say there is a vault door requiring five keys to open, held by five different trusted individuals. No single person can access the vault, and even if one key is stolen, the vault remains secure as long as the others are safe. This is roughly how MPC wallets work with your private key shards. Simple but amazing, right?
What are Cold Wallets for Crypto Storage?
How about our old friend cold storage wallets? (If you have been quite familiar with this type of cryptocurrency wallets, you might want to jump to our comparison table for a quick conclusion.)
OK, let’s start with the cliché—the definition part. Cold wallets are a way of holding cryptocurrency keys offline using cold storage devices like hardware wallets resembling USB drives (e.g., Ledger USB Wallet) or small computers, paper wallets with private keys printed, cold storage vaults relying on specialized high-security companies, and air-gapped computers.
Crypto cold storage wallets are easier to understand than MPC wallets because, basically nothing is beyond your knowledge. Now, tech adventurers, imagine taking your crypto offline, locking it up in a fancy steel box, and burying it in your digital backyard (don't worry, no shovels needed!). That's essentially what cold storage does. It keeps your private keys—the keys to your crypto kingdom—away from prying eyes and sticky fingers online.
What is the Best Cold Storage Wallet?
Want to select the best cold storage wallet among many types but are afraid of getting bogged down in technical jargon? No worries! We’ll help you make a quick comparison between different cold storage wallets. You’ll find what is the best for you by checking their pros and cons.
CDs, USB sticks, hard drives, small computers
* Easy to use with intuitive interfaces.
* A wide range of cryptocurrencies supported.
* Secure and offline.
* Physical vulnerability.
* Basic tech requirements for setup
* More expensive for air-gapped devices.
*Easy to generate.
*Completely safe and offline.
* Difficult for transaction.
* Easy to lose, damage.
* No recovery option once lost.
Third-party Vault Services
* High Security with optional insurance.
* Multi-signature security.
* High expense
* Rely on third-party companies.
* Personal info requirements
As you can see, each option has its own pros and cons. So you need to choose the best cold wallet for your crypto riches with a trade-off. Before making a decision, ask yourself these questions:
- Security needs: How vulnerable do you think your online access is?
- Frequency of transactions: How often do you plan to access your crypto?
- Budget: How much are you willing to spend on security?
- Technical skills: Are you comfortable with setting up and using advanced tools?
And remember, dude, even the safest cold storage methods require additional security practices. Always secure your recovery phrases offline, keep your firmware updated, and choose reputable solutions with a proven track record.
MPC Wallets vs. Cold Storage Wallets
Let's get back to business. Now, you have a brief understanding of both MPC wallets and cold storage wallets and know both MPC wallets and cold storage wallets offer enhanced security for your crypto assets.
Still don’t know which to choose? You'll have a clear mind after viewing these quick takeaways of both.
A Comparison Table (More Intuitive):
Cold Storage Wallets
High to relatively high
Low (Except Air-Gapped devices)
MPC Wallets split your private key into fragments stored on secure, distributed online computing nodes. No single point of failure, making it highly resistant to hacks and single-node compromises.
Cold Storage Wallets, on the contrary, keep your private keys completely offline, completely eliminating online vulnerabilities. However, losing your physical device or recovery phase leads to permanent loss of funds.
Convenience of Transactions
MPC Wallets Offer relatively user-friendly interfaces for sending and receiving crypto, often similar to hot wallets that you might have heard of. Some integrate with other DeFi platforms.
Cold Storage Wallets can be less convenient, especially hardware wallets requiring connection and dedicated apps for transactions. Don’t even say paper wallets.
MPC Wallets can be accessed from any device, only if with internet access and the designated wallet app.
Cold Storage Wallets like hardware wallets need a physical connection to your device or manual signing and scanning for online interactions (paper wallets).
MPC Wallets generally are user-friendly with minimal technical knowledge required.Cold Storage Wallets: Hardware wallets have a slight learning curve for setup and initial use.
Cost of Crypto Wallet Setup
MPC Wallets may require lower wallet fees while some are free though with limited features.
Cold Storage Wallets usually involve an initial purchase cost (except free risky paper wallets), which could range from moderate to very high fees based on devices and channels.
Alright, we have discussed so many differences between MPC wallets and traditional cold storage wallets, here's a quick decision guide for you:
You can choose MPC wallets if you prioritize high security but enjoy online accessibility and potential DeFi integration.
Or you might be more suitable for cold storage wallets if you want maximum offline security and are comfortable with less frequent access or manual procedures.
Both cold storage wallets and MPC wallets are great, and there are some well-regarded MPC and cold storage wallet options like MPC-based Threshold Network, Ngrave ZERO, Keyless.io, and Symphonic for MPC. Famous cold wallet providers include Ledger Nano X/S, KeepKe, and Coldcard Mk4.
Anyway, the best choice for cryptocurrency storage in 2024 depends on your individual needs and preferences. Consider how often you access your crypto, your comfort level with technology, your budget, and your desired level of security and convenience.