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Security & Cryptography

The Qredo Network includes a secure architecture that allows transaction data to remain on the Qredo blockchain, and be handled 24 by 7. Cryptography, running behind-the-scenes, ensures that all data is kept hidden, and reduces the likelihood of attacks to impossible odds.

This page describes the following:

Data Center Security#

The physical Qredo Network is distributed where devices are stored in six Tier-4 data centers. The data centers are based on global financial capitals of Hong Kong, Tokyo, Singapore, London, Chicago, and New York. Tier-4 data centers deliver redundancy for all computing equipment to ensure maximum security.

Data Center Components#

Each data center contains dedicated computing equipment to support the MPC, Qredo blockchain and watcher components. This includes:

  • Qredo appliances that house hardware units for the MPC nodes and the MPC validator. Each MPC node can be a client or a server node.
  • a PC that holds the watcher and Blockchain validator services.

Whenever transactions are written to the Qredo blockchain, the transactions are backed up on another device. Similarly, encrypted MPC keys are copied to each of the server and clients across multiple data centers.

Communication takes place between data centers over routers. Between the hardware units on the device, communication takes place over SSH.


Each hardware unit has a tamper-proof HSM (Hardware Security Module) that protects the seed value and public/private key data from attacks in a physical environment. The HSMs adhere to the FIPS (Federal information Processing Standard Publication 140-2) security standard. FIPS 140-2 is a US government computer security standard for cryptographic modules which ensures that cryptographic keys and primitives never leave the hardware appliances that they exist in.

MPC Protocol#

The MPC (Multiparty Computation) protocol is based on MPC cryptography which is characterized by secret shares. The protocol is applied to a set of MPC nodes that work together to generate a signed public key and a public wallet address for securing transactions on the Qredo Network. Through its use of mathematics in a unique way, the MPC removes the need to sign transactions with a private key. Instead, the protocol uses its own aggregated signatures for the signing. Each of these signatures corresponds to a portion of a private key, and the original private key is never reconstructed. This removal takes away the risk of private key theft.

The MPC protocol runs when generating a wallet address for cryptoassets coming into the Qredo Network. The protocol also runs when creating an address to accept the change from a settlement. In both cases, the transactions are signed.

The MPC protocol communicates with the blockchain validator nodes via the watcher service to ensure that it can process the correct wallet (more information is described in the Architecture page.

MPC Communication Flow#

For generating a public key through the MPC protocol, the task is divided across a pair of client and server nodes, which take place across all the data centers. By enabling the process to take place across multiple data centers, single points of failures are removed. Both the client and server nodes compute details of keys which remain shared secrets.

Several steps are needed to produce the final public key:

  1. A client and server node each generate their respective key data.

  2. The client node and server node each generate a separate AES-encrypted key.

  3. The client node and server node each encrypt the key data with the AES key.

  4. The keys are stored in an AWS database.

  5. The AES key is encrypted for the client and server nodes in all the data centers.

  6. The AES key is decrypted for all the client and server nodes.

  7. Both client and server nodes communicate to sign a new public key.

  8. The public key and digital signature are sent to the watcher to generate a new address.

Paillier Cryptosystem#

The MPC uses the Paillier cryptosystem when the protocol is run. The Paillier cryptosystem handles secrets for communication between two parties. The cryptosystem uses the homomorphic encryption method which performs calculations on encrypted text (or cypher text) to generate another level of encrypted results. By way of the mathematics, the cryptosystem ensures that the result of the decryption is the same as the original decrypted cipher text.


The MPC uses SECP256K to ensure that the generated public key is compatible with Bitcoin and Ether. SECP256K is the signature algorithm used by these cryptoassets. Other cryptoassets use SECP256K, which will allow Qredo to provide support for these currencies in future releases.

Note: SEC means Standards for Efficient Cryptography

SECP256K1 is the discrete elliptic curve group used in Bitcoin and Ether's implementation of ECDSA (Elliptic Curve Digital Signature Algorithm). Elliptic curve cryptography allows the points of elliptic curves to determine values such as public, private keys, and the coefficients for determining key values.

BLS Signature Scheme#

To determine asset ownership and governance on the Qredo blockchain, the Qredo Network uses the BLS (Boneh–Lynn–Shacham) signature scheme. For example, each time a custodian approves a transfer, a BLS signature is generated. BLS allows the sharing of public keys as well as the aggregation of signatures that is required to apply the consensus rules in Qredo. The signature scheme provides a highly efficient way of aggregation over other signature aggregation methods.

Key Generation#

BLS public and private key pairs are generated when an IDDoc is created for a user who joins the Qredo Network. A seed value, stored in the secure enclave of a secure hardware appliance, generates a private and public key pair.

BLS Encryption Method#

BLS uses elliptic curve cryptography combined with bi-linear mapping to calculate public keys, private keys, and signatures. Bi-linear mapping features algebra to find equivalent expressions. Through its mathematics, BLS allows the creation of shorter signatures for more efficient signing.


Cryptography in Qredo is built from the Apache Milagro project. More information is also available from Qredo's Yellow Paper on the main Qredo website.