What is a Hierarchical Deterministic (HD) wallet?

Modified on Fri, 24 Mar 2023 at 06:01 PM

A Hierarchical Deterministic (HD) wallet is a type of wallet structure based on mathematical principles that allow users to generate an unlimited number of private keys and public keys and can effectively backup and restore wallet information.

Unlike traditional wallets, HD wallets use a seed, typically a set of 12, 18, or 24 words called a mnemonic, and a unique algorithm to generate all the private and public keys.

This means that you only need to backup the mnemonic once and can easily restore your wallet information at any time, anywhere, without worrying about the loss or theft of private keys.

HD wallets typically use the BIP32 and BIP44 standards, which define some paths and rules for generating different private and public keys.

For example, using BIP44, you can generate a separate sub-wallet for each currency and generate a separate mnemonic for each sub-wallet. This makes it easier to manage multiple cryptocurrencies while also improving the security and reliability of the wallet. This is also the protocol CoolWallet adopts.

In summary, HD wallets are a convenient, secure, and easy-to-use type of wallet that generates all private and public keys using mathematical principles, making wallet backup and restoration easier.

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