Crypto enthusiasts pledge to build a decentralized money system that will allow people to trade freely without interference. It’s a rosy picture, but recent events of security vulnerabilities indicate that the decentralized world may not yet work as well as the faithful envision.
That is why entrepreneurs, infused with venture capital, are racing to make crypto applications more secure. One is Singapore-based Safeheron, which recently raised $7 million in a pre-Series A round of funding.
Safeheron’s goal is to make private keys more secure. Private keys, which are essential for decentralized crypto apps, allow individuals to take control of their digital assets through self-custody wallets rather than leaving control to a centralized institution.
When users make a transfer from their self-keeping wallet, they must sign off the transaction with those passphrases. In effect, users become their own bank.
However, this arrangement entails risks. If hackers get their hands on certain secret codes and empty their wallets, users will have no way of getting their money back in the absence of a centralized party taking on responsibilities.
Safeheron’s solution to support private key security takes cues from the multi-party computation (MPC) concept, which was first introduced by a Turing Award-winning computer scientist. In the context of digital assets, MPC works by dividing the signing process across multiple computers, as opposed to the conventional way of relying on a single private key to approve transactions.
Bruce Wang, chief technology officer at Safeheron, gave this analogy: “Suppose you have a safe. Instead of using a single original key, we use multiple keys to open it.”
Other startups also use MPC to enable distributed signing of crypto transactions, but Wang pointed out that Safeheron is open source, which gives its customers more transparency in the source codes.
“Being open source is key to building trust among users,” said Yu Chen, a partner at Yunqi Partners, who co-led the latest round of Safeheron with Web3Vision.
Like several other leading venture capital firms targeting China, Yunqi allocates capital to support web3 projects built by Chinese talent and targeting the global market.
Other investors in the round include PrimeBlock Ventures, M77 Ventures, ShataCapital, Kryptos, Antalpha Ventures, Waterdrip Capital, 7 O’Clock Capital, Misa Zhu, founder of AR glasses maker Rokid, and Fan Zhang, a former co-founder of Sequoia Capital China .
Since the product launch in October, Safeheron has served more than 20 customers, holding more than $100 million in cryptocurrencies in total and facilitating more than $4 billion in transactions using Safeheron’s wallet as a service, Wang said.
The fledgling startup just took on board a heavyweight client, the popular Ethereum-based wallet MetaMask, which had amassed more than 30 million monthly active users by March. By adding Safeheron’s MPC capabilities, MetaMask can enable users to sign transactions with multiple devices or applications instead of just one.
Like many Singapore-based web3 entrepreneurs, Wang and his co-founders are veterans of the Chinese tech industry. While China has banned crypto trading to prevent financial speculation, the government has supported research efforts into the underlying blockchain technology, Yunqi’s Chen noted.
“China is working on its own digital currency, which could also leverage technologies like MPC in the future,” Wang suggested.