Definition
A hierarchical deterministic wallet derives a structured tree of cryptographic keys from a starting secret using defined mathematical rules. Bitcoin's BIP-32 standard describes a common method for creating parent and child keys, allowing a wallet to organize accounts and generate many receiving and change addresses. Because derivation is deterministic, the same starting information and paths can reproduce the same keys. An extended public key can support watching-only functions and address generation for eligible branches without revealing the corresponding spending keys. However, sharing it can expose a broad view of wallet activity and should not be treated as privacy-neutral. An HD wallet is not synonymous with a specific recovery-word format; mnemonic encoding and key derivation are related but separate standards. Successful recovery may require knowing the wallet's script type and derivation paths as well as possessing the correct secret material.
Source references
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