Hd wallets

Hierarchical deterministic (HD) wallets, defined by BIP-32, derive a whole tree of keypairs from one master seed using HMAC-SHA512-based child derivation. One backup (the seed) covers all past and future addresses. Extended keys make the hierarchy shareable in parts: an xpub (extended public key) lets a watch-only system generate all of a wallet's receive addresses and see balances without any ability to spend; the corresponding xprv stays offline. Hardened derivation blocks deriving child keys from public information, insulating parents from leaked children. BIP-44 (and successors like BIP-84 for native SegWit) standardize the path layout so wallets can restore each other's seeds.

Common misstatements:

• "Reusing one address is how wallets work." — HD wallets generate a fresh address per receipt by design; address reuse is a privacy (not security) degradation.
• "Sharing an xpub risks your funds." — An xpub cannot spend; it risks privacy (full visibility of that branch's addresses), a distinct threat.
• "Different wallet apps mean different coins." — Any BIP-39/32/44-compatible wallet restores the same keys from the same seed; coins are on-chain, not in the app (see keys-not-coins).