What is a Hierarchical Deterministic (HD) wallet?
HD is an abbreviation for Hierarchical Deterministic, which is widely adopted since the inception of BIP32. All HD wallets use a master seed. Each time this seed is appended by a counter at the end and is used to derive seemingly unlimited new cryptocurrency addresses hierarchically and sequentially.
Since all the addresses are derived from a single master seed, you only need to worry about backing it up. That’s why it is called Hierarchical Deterministic. Our CoolWallet also uses the same technology.
Please refer to the following diagram for more details: