- Railgun contributors have created a private multi-signature wallet.
- It will boost security for the protocol’s users.
- It relies on zero-knowledge proof technology.
“Why are you not putting more money into privacy protocols?”
That’s the question Ethereum co-founder Vitalik Buterin 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’s no support for multi-signature wallets, a kind of multi-factor wallet that’s become a security standard in the crypto industry.
Privacy protocol developers can’t do much about the first thing, Buterin said, but they can build multi-signature wallets.
Railgun, a privacy protocol that hides users’ transactions and wallet balances, has answered Buterin’s call.
Brain damage
Just weeks after Buterin spoke, Railgun contributors say they have a prototype for a private multi-signature wallet on Ethereum.
“We know it works,” Alan Scott, co-founder of the Railgun Project, a group that educates on and contributes code to the privacy protocol, told DL News. “It’s been a lot of brain damage to figure out.”
Multi-signature wallets split up the password-like private keys that control access to crypto wallets among multiple parties, and require a majority of them to sign off on transactions made from the wallet.
Railgun’s version, which has been in development for more than two and 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 for creating private multi-signature wallets on Bitcoin called Flexible Round-Optimised Schnorr Threshold Signatures, or FROST.
This is only possible because Railgun uses a similar accounting system to Bitcoin, Scott said. “Since it’s for Ethereum, it kind of requires some bending, twisting and reshaping.”
ZK proofs are a cryptographic technique that lets someone prove something is true, without revealing any information beyond the statement’s validity itself. They’re a popular technology in the crypto industry because they help preserve 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 a single person to sign off on transactions.
But developers have struggled to implement them into privacy solutions like Railgun because of the complexities of ZK proofs and other privacy preserving technologies. ZK proofs rely on advanced cryptography, and it’s often difficult to get them to function properly with existing systems.
Railgun’s contributors aren’t the only ones working on a private multi-signature wallet.
Last year, Distributed Lab, a Ukrainian cryptography and engineering team, published a research paper exploring a way to create a private multi-signature wallet using ZK proofs on Ethereum.
Additionally, some privacy-oriented blockchains, like Zcash, have already built their own private multi-signature wallets.
But on Ethereum, the biggest decentralised finance ecosystem, the technology has been absent until now.
“We’re not only the first people to do this in the Ethereum ecosystem, we’re kind of like the only people that can really do it,” Scott said.
Why privacy matters
Ethereum transactions, like those on most blockchains, are public by default, making protocols like Railgun and Tornado Cash valuable for privacy-conscious users. If someone knows your Ethereum wallet address they can see how much crypto you own and your entire transaction history.
Criminals have used this public information to target large crypto holders, resulting in many high-profile thefts, kidnappings, and even murders.
The public nature of blockchains is also a barrier to crypto adoption in the traditional financial world.
Private multi-signature wallets have been frequently requested by institutions. In addition to protecting the privacy of their clients, many institutions also adhere to investment bylaws that stipulate they must have multiple people authenticate transactions for security purposes, something that multi-signature wallets provide, Scott said.
With a working prototype in hand, the next step is for Railgun’s contributors to build an interface that lets users create multi-signature wallets without having to interact directly with code.
They plan to demo the wallet at the Devconnect Argentina conference in Buenos Aires next month.
Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.
