Fully Homomorphic Encryption (FHE) vs. MPC: Comparing Two Approaches to  Cryptographic Privacy

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Fully Homomorphic Encryption (FHE) vs. MPC: Comparing Two Approaches to Cryptographic Privacy

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In an era where data is as valuable as gold, their protection is coming under increasing scrutiny, especially in the realms of finance, healthcare, government. Correspondingly, there is a greater need than ever for technology to ensure the secure and private handling of sensitive information. This is where advanced cryptographic techniques like Homomorphic Encryption (HE) and Multi-Party Computation (MPC) come into play, emerging as pivotal solutions in the quest for data security and privacy.

But what exactly are Homomorphic Encryption and Multi-Party Computation? How do they work, and more importantly, how do they differ in their approach to securing data? These questions are crucial, especially for businesses like CoinsDo, which operate in the sphere of self-custodial Digital Asset Custody solutions.

This blog aims to explore these groundbreaking technologies, comparing their strengths, weaknesses, and potential applications, to shed light on which might lead the way in the future of cryptographic privacy.

Understanding Fully Homomorphic Encryption (FHE)

Fully Homomorphic Encryption (HE) is a form of encryption that allows computations to be carried out on ciphertexts, generating an encrypted result which, when decrypted, matches the result of operations performed on the plaintext. This means you can perform calculations on encrypted data without ever needing to decrypt it. This is akin to sending a locked treasure chest through someone, who can somehow change the contents without ever opening it.

Key Features of FHE

Data Privacy: The most significant feature of HE is its ability to maintain data privacy. Since the data remains encrypted throughout the process, it ensures that sensitive information is never exposed, even during computations.

Versatility in Computations: HE is not limited to basic operations. It can handle a range of mathematical functions, making it versatile for various applications.

Use Cases and Applications

Secure Data Aggregation: In sectors like healthcare or finance, where data is sensitive, HE can be used for aggregating data and generating insights without exposing individual data points. For instance, a research institute could analyze patient data from various hospitals for a study on a new drug's effectiveness without actually accessing any patient's personal health information.

Cloud Computing: HE allows users to securely outsource storage and computation to the cloud. For example, a company could encrypt its financial records and move them to the cloud. Even in the cloud, these records can be processed and analyzed without ever decrypting them, ensuring data privacy.

Exploring Multi-Party Computation (MPC)

Multi-Party Computation (MPC) is a cryptographic approach that allows multiple parties to jointly compute a function over their inputs while keeping those inputs private. Imagine a group of people, each with their own secret number, wanting to find out the average of all their numbers without revealing their individual numbers to each other. MPC makes this possible.

Key Features of MPC

Collaborative Computation: MPC is designed for scenarios where multiple parties need to collaborate without revealing their private data.

Data Privacy: It ensures the privacy of each party's input during the computation process.

Versatility: MPC can be applied to a wide range of functions and is not limited to specific types of computations.

Use Cases and Applications

Financial Services: In the financial sector, MPC can enable banks to collaborate on fraud detection algorithms without sharing their customers' private data. Banks could jointly analyze transaction patterns to identify fraud while keeping individual transaction details confidential.

Crypto Wallets Security: MPC can significantly enhance the security of crypto wallets by distributing the process of key generation and transaction signing across multiple parties, which ensures that no single point of failure exists.

Comparative Analysis

In this section, we'll compare Fully Homomorphic Encryption and Multi-Party Computation across various dimensions to understand their strengths, weaknesses, and suitability for different applications.

Speed and Efficiency

Homomorphic Encryption: FHE is known for its computational intensity. The process of performing operations on encrypted data can be significantly slower than unencrypted operations. This makes it less efficient for real-time applications.

Multi-Party Computation: While MPC also involves computational overhead, it is generally more efficient than HE for many practical applications. The efficiency of MPC, however, can diminish as the number of participants in the computation increases.


Homomorphic Encryption: Scaling FHE can be challenging due to its computational demands. As the data size or complexity of operations increases, the performance tends to degrade more noticeably.

Multi-Party Computation: MPC scales better in scenarios involving multiple parties but can face challenges when the computations become highly complex or when the data volume is large.

Data Privacy and Integrity

Homomorphic Encryption: Offers a high level of data privacy since the data remains encrypted at all times. However, the integrity of the computation depends on the encryption scheme used.

Multi-Party Computation: Provides strong privacy guarantees for individual inputs. The overall computation's integrity is maintained as long as a majority of the participants are non-malicious.

Accessibility and Ease of Use

Homomorphic Encryption: Implementing FHE can be quite complex and requires specialized knowledge in cryptography. This makes it less accessible for general users or developers without a background in this field.

Multi-Party Computation: While MPC is also complex, there are more frameworks and tools available that make it somewhat more accessible for collaborative computations among parties with varying levels of technical expertise.

Embracing the Best of Both Worlds in Cryptographic Privacy

As we've explored the intricate landscapes of Homomorphic Encryption and Multi-Party Computation (MPC), it's evident that both technologies offer unique and powerful approaches to maintaining privacy in the digital realm. Homomorphic Encryption shines with its ability to perform computations on encrypted data, offering a level of security that is invaluable in a world increasingly concerned with data privacy. On the other hand, MPC brings to the table the remarkable capability of multiple parties collaboratively computing data without exposing their individual inputs, a feature that's becoming increasingly crucial in our interconnected world.

The question of which technology leads the future of cryptographic privacy isn't about choosing one over the other; rather, it's about recognizing the strengths of each and understanding how they can complement each other in different scenarios. As the landscape of digital security continues to evolve, it's likely that both Homomorphic Encryption and MPC will play pivotal roles, sometimes independently and other times in tandem, to address the diverse needs of cryptographic privacy.

David Ho

The Author

David Ho

Writer / Blockchain Enthusiast