variant of a classic cryptocurrency wallet is the HD wallet (hierarchical
deterministic wallet). HD wallets formulate a mechanism where private and
public addresses are derived from a seed or a master key. They make use of
patterns that prevent other users from guessing your particular combination or
Typically, cryptocurrency wallets initiate a new wallet address from a unique random numeral. It even formulates a new separate backup every time a new wallet address is generated. Generally, a cryptocurrency wallet development company tends to develop a single bank up which is fully restored from the backup of the single master seed. Seeds are arranged in a format of readable words in a mnemonic phrase.
these are referred to as hierarchical deterministic wallets because they
generate a hierarchical tree-like structure of private and public keys. The
nodes can also be termed as infinite children or grandchildren (not like humankind).
This signifies that it supports numerous accounts of different
cryptocurrencies, with each expressing a unique address.
wallet development companies analyzed the gap of security and anonymity and
thus articulated a structure to improve the security of tokens.
The functionality of HD wallets
For the working
of the HD wallet, users mainly require a private key and public address for the
transactions of crypto assets. The combination of public and private keys
ensures the safety and privacy of your transactions. As the number of
combinations grows, storage and backup become complicated with every new
professional cryptocurrency wallet development companies work on a special
algorithm for managing new pairs of public and private keys. They use the
SHA-256 hash algorithm to produce a tree-like structure without any errors.
development companies that provide HD wallets usually implement BIP (Bitcoin
Improvement Proposal) 32/39 or 44 to derive the private keys. This protocol
enables the creation of childlike keys in a hierarchy.
system generates a new wallet by using the same seed. This element even saves
your wallet from the corrupt drive. It is a more convenient option and easy to
remember. You may restore your address and private keys by using the same seed
Advantages of Hierarchical Deterministic
HD wallet comes with a list of various advantages which is why the professionals of a cryptocurrency wallet development company harness the hierarchical deterministic approach. The lists of advantages are mentioned below:
Sharing your access to a cryptocurrency wallet is like
sharing your bank account credentials with strangers. You may never be able to
see your cryptocurrency again if you lose your access to a private key. Thus,
security is of the utmost importance for any wallet.
The user of the HD wallet has access to a secret key –
also known as a seed or the master key. When the master key combines with the
hash functions, an unlimited number of public addresses are created. With the
number of private/public keys, infinite addresses can be created. Thus every
time you initiate a cryptocurrency transaction, a different set of addresses
will be generated. You may use the different public addresses for every
transaction; therefore it eliminates every chance to recognize the user, thus
making the overall activity anonymous.
The secret phrase in a crypto wallet is easy to
remember. The master key is a sequence of characters or a 12, 18 or 24-word
mnemonic phrases. It is convenient to remember the passphrase.
convenient for backup
In the conventional cryptocurrency wallet, every
client needs to generate a backup and store them in case of an emergency. This
leads to the invalidating space as the space for the key pool is exhausted in a
shorter time. On the other hand, the deterministic wallet generates unlimited
addresses in a known fashion and a single backup is created. It further solves
the problem of losing funds.
Hierarchical deterministic wallets are the most reliable
wallets to store coins and tokens. They offer the security of transactions,
which makes it unfeasible to track them on the blockchain. It provides an
additional feature for the backup of the seed key. This mechanism provides you
more control over your transactions.
If you are planning to build your HD wallet, we can
help. Our blockchain engineers and subject matter experts work together to
deliver feature-rich HD wallets with highly-secure and flexible infrastructure.
Besides, we specialize in delivering white label solutions to provide our clients with the best multi cryptocurrency walletfortified with market-leading features like mnemonic phrases, biometric authentication, multi-signature support, QR code scanner, NFC support, intuitive interface, and more.