- Railgun contributors have created a private multi-signature wallet.
- This will increase the security of users of the protocol.
- It relies on zero-knowledge proof technology.
“Why don’t you invest more money in privacy protocols? »
That’s the question Vitalik Buterin, co-founder of Ethereum, asked an audience during a session at the Web3Privacy Now meetup in Tokyo last month.
There are two main reasons, Buterin said, answering his own question. The technology is too new and complex, and there is no support for multi-signature wallets, a kind of multi-factor wallet that has become a security standard in the crypto industry.
There’s not much privacy protocol developers can do, Buterin said, but they can create multi-signature wallets.
Railgun, a privacy protocol that hides users’ transactions and wallet balances, responded to Buterin’s call.
Brain damage
Just weeks after Buterin’s speech, Railgun contributors say they have a prototype multi-signature private wallet on Ethereum.
“We know it works,” said Alan Scott, co-founder of the Railgun Project, a group that educates and contributes to the privacy protocol code. DL News. “It took a lot of brain damage to figure out.”
Multi-signature wallets distribute the password-like private keys that control access to crypto wallets among multiple parties and require a majority of them to sign transactions made from the wallet.
The version of Railgun, in development for more than two and a half years, hides which users control the wallet and relies on the same zero-knowledge proof, or ZK proof, technology that underpins the Railgun protocol.
It implements a method of creating multi-signature private wallets on Bitcoin called Flexible Round-Optimized Schnorr Threshold Signatures, or FROST.
This is only possible because Railgun uses an accounting system similar to Bitcoin, Scott said. “As it is for Ethereum, it kind of requires some bending, twisting, and reshaping.”
ZK proofs are a cryptographic technique that allows someone to prove that something is true, without revealing any information beyond the validity of the statement itself. This is a popular technology in the crypto industry because it helps maintain privacy.
Difficult to implement
Multi-signature wallets are a mainstay of the $4.3 trillion crypto industry. The multi-factor authentication they provide is much more secure than wallets that only require one person to sign transactions.
But developers have struggled to implement them in privacy solutions like Railgun due to the complexity of ZK proofs and other privacy-preserving technologies. ZK proofs rely on advanced cryptography and are often difficult to make them work well with existing systems.
Railgun contributors aren’t the only ones working on a multi-signature private wallet.
Last year, Distributed Lab, a Ukrainian cryptography and engineering team, published a research paper exploring a way to create a multi-signature private wallet using ZK proofs on Ethereum.
Additionally, some privacy-focused blockchains, like Zcash, have already created their own private multi-signature wallets.
But on Ethereum, the largest decentralized financial ecosystem, the technology has been absent until now.
“We’re not only the first to do this in the Ethereum ecosystem, we’re kind of the only ones who can really do this,” Scott said.
Why Privacy is Important
Ethereum transactions, like those on most blockchains, are public by default, making protocols like Railgun and Tornado Cash valuable to privacy-conscious users. If someone knows your Ethereum wallet address, they can see how much crypto you own and your full transaction history.
Criminals have used this public information to target large crypto holders, leading to numerous high-profile robberies, kidnappings, and even murders.
The public nature of blockchains also poses an obstacle to the adoption of cryptocurrencies in the traditional financial world.
Multi-signature private wallets have been frequently requested by institutions. In addition to protecting their customers’ privacy, many institutions also adhere to investment regulations that stipulate that they must have multiple people authenticate transactions for security purposes, which is what multi-signature wallets provide, Scott said.
With a working prototype in hand, the next step is for Railgun contributors to create an interface that allows users to create multi-signature wallets without having to directly interact with the code.
They plan to demo the wallet at the Devconnect Argentina conference in Buenos Aires next month.
Tim Craig is DL News’ DeFi correspondent based in Edinburgh. Contact us with advice at tim@dlnews.com.
