HD wallets
What’s HD Wallets?
Key Takeaways
- A hierarchical deterministic wallet is a digital wallet commonly used to store the keys for holders of cryptocurrencies such as Bitcoin and Ethereum.
- To prevent hacking these keys must be randomly generated and backed up in the wallet.
- HD wallets enable a series of key pairs to be created from one random seed, providing convenience and manageability as well as high-level security.
Deterministic vs. Hierarchical Deterministic Wallets
Specification
| Name | Code | Description | Etc. |
|---|---|---|---|
| BTH | BIP-32 | Hierarchical Deterministic Wallets | |
| BTH | BIP-39 | Mnemonic code for generating deterministic keys | |
| BTH | BIP-44 | Multi-Account Hierarchy for Deterministic Wallets | |
| ETH | ERC-4337 | Account Abstraction Using Alt Mempool | |
| Trezor | SLIP-39 | Shamir’s Secret-Sharing for Mnemonic Codes | |
| Trezor | SLIP-23 | Cardano HD master node derivation from a master seed |
Benefits and Risks of HD Wallets
Prior knowledge
HD Wallets Derivation Paths
BIP-44
Connection structure
What is an Multi-Party Computation (MPC) wallet?1
An MPC wallet uses multi-party computation technology with the intention of enhancing security for your cryptocurrencies and other digital assets. It splits a wallet’s private key among multiple parties to increase privacy and reduce the risks of hacking, breaches, and losses. Unlike traditional wallets that rely on a single private key, MPC Wallets use advanced cryptographic techniques to strive to ensure that the private key is never exposed or stored in one location.
Benefits and Risks of MPC Wallets
MPC wallets may provide several benefits, including enhanced security, flexibility, and control. They aim to enable multiple parties to participate in the management of digital assets, enabling improved security & risk mitigation, more efficient asset management & transfer, advanced access control & permissions, and streamlined collaboration between different parties. Potential risks include high communication costs and technical complexity. It’s also worth noting that not all MPC wallets are open-source or interoperable, which could limit their usability and compatibility with other systems.