What is the derived path for HD wallets?

HD wallets utilize a derivation path, defined by a sequence of child indices, to generate multiple key pairs from a single seed phrase, providing a secure and manageable way to store and manage cryptocurrencies.

Feb 22, 2025 at 12:01 am

Key Points

Definition and purpose of HD wallets
Derivation path explained
BIP-32 derivation scheme
Common derivation paths for popular cryptocurrencies
Importance of securing the seed phrase

What are HD Wallets?

Hierarchical deterministic (HD) wallets are a type of cryptocurrency wallet that uses a cryptographic derivation scheme to generate multiple public and private key pairs from a single seed phrase. This seed phrase is a series of 12-24 random words that can be used to recover the entire wallet if necessary.

Derivation Path

The derivation path is a string of numbers that specifies the exact sequence of steps used to derive a specific key pair from the seed phrase. It consists of a series of child indices, each separated by a forward slash (/).

BIP-32 Derivation Scheme

BIP-32 is the most widely used derivation scheme for HD wallets. It defines a hierarchical structure of key pairs, where each key pair can be either a parent key or a child key. The path to a child key is determined by the path from the root key to the parent key, followed by the child index.

Common Derivation Paths for Popular Cryptocurrencies

Different cryptocurrencies use different derivation paths to ensure compatibility with their respective blockchain networks. Here are some common paths:

Bitcoin (BTC): m/44'/0'/0'/0/0
Ethereum (ETH): m/44'/60'/0'/0/0
Litecoin (LTC): m/44'/2'/0'/0/0
Binance Smart Chain (BSC): m/44'/60'/0'/0/0

Importance of Securing the Seed Phrase

The seed phrase is the master key to an HD wallet. If it is lost or compromised, the entire wallet can be compromised. It is crucial to store the seed phrase securely, either offline or using reputable password management services.

FAQs

Q: Can I use the same seed phrase for multiple HD wallets?
- A: Yes, the same seed phrase can be used to generate multiple HD wallets. However, each wallet will have its own set of public and private key pairs derived from the seed phrase.
Q: What happens if I forget my seed phrase?
- A: If you forget your seed phrase, there is no way to recover your HD wallet. It is therefore essential to store your seed phrase securely.
Q: Is it safe to store my seed phrase online?
- A: No, it is not recommended to store your seed phrase online. Instead, store it on a physical device, such as a hardware wallet or a piece of paper.

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