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Version: 3.1.0

Introduction

HD Wallets are defined in BIP-32.

Hierarchical Deterministic Wallets, or HD Wallets, introduce cryptocurrency wallet technology that allows for the creation of a tree-like structure of wallet keys, with the maximum depth of 256. A single seed, usually created using mnemonic sentences (BIP-39) that allow for easier memorization, is used to generate the master keypair. From it, 232 direct child key pairs (231 hardened and 231 non-hardened) can be derived and every node in hierarchy can derive the same amount of its own children.
The entire wallet structure is recoverable from the seed, or master key. Wallet sub-structures can also be recovered from parent key data, without knowing the master key data or seed at all.

HD Wallet Diagram Diagram of an HD Wallet

Why HD Wallets?​

Security​

As long as the master seed and key is kept secret, only the branch of the structure that has its private key leaked is exposed. This reduces the risk of exposure of specific, important keys compared to managing multiple standalone keys.

Recovery​

Having the master seed, or the key that is the parent of the current branch allows for backup and easy recovery of any child key derived from it. This makes backup and recovery much easier than storing multiple standalone keys.

Privacy​

A new address generated for every transaction makes tracing transactions more difficult which in turn enhances privacy of the wallet.

Compatibility​

HD Wallets are supported widely by various cryptocurrency wallets. It is easier to switch wallets or use the same wallet key structure on multiple wallets.

Multi-Currency Support​

Multiple cryptocurrencies can be managed by a single wallet. This allows for less separate wallets used for each asset.

User Experience​

Managing multiple keys is difficult and without careful management may result in key and asset loss. Using HD Wallets removes most of that risk, because the complexity of key management is abstracted away. Only master seed or key is needed to access wallet assets.

Child Types​

Child keys can be either hardened or non-hardened. The concept of hardened keys allows for greater control over security and infrastructure of the Wallet. Every key has 231 hardened and 231 non-hardened children. Hardened children can only be derived using the parent private key, while non-hardened public keys can be derived using the parent public key.

Key Structure​

This plugin adapts the key elements into blueprint-friendly types encapsulated in a structure.

Members​

Key Type​

The type of the key, either Public or Private. Invalid keys may be set to None.

Version​

Version of the key. Specifies the type of blockchain the wallet is used on. This affects the key serialization.

Depth​

Depth of the key. In the wallet tree-like structure, specifies the number of parent nodes including the master key.

Parent Fingerprint​

The first 4 bytes of the parent key identifier, which is Hash160 (RIPEMD160 after SHA256) of the public key data.

Child Type​

The type of child this key is, either hardened or non-hardened. This is then used to adjust the child number for the purposes of BIP-32. Master key is always non-hardened (because the default child number for master key is 0).

Child Number​

The index of the child key this key represents. A number between 0 and 231-1.

Chain Code​

Additional 32 bytes of data used in key derivation. The initial chain code is generated from entropy obtained from a Cryptographically Secure Pseudo Random Number Generator (CSPRNG).

Key Data​

The data of the cryptographic key this HD Wallet extended key represents.

Creating a Key Structure from Members​

Make HD Wallet Key creates a new HD Wallet Key structure from direct data. This function requires inputs as follows:

Creating a Key Structure from Members

The result key structure is held within the value Key 9.

Accessing Key Structure Members​

Break HD Wallet Key extracts direct key data from a key structure. This function requires inputs as follows:

  • Key 1 : The key which is to be accessed.

Accessing Key Structure Members

The output values are: