Hierarchical Deterministic (HD) Key Generation
Hierarchical deterministic (HD) key generation is a method used in bitcoin and other cryptocurrencies to generate a tree-like structure of derived keys from a single "seed" value. This seed value can be a random number or a user-provided passphrase. HD key generation is used in the bitcoin industry as a way to manage multiple addresses or accounts in a secure and efficient manner.
The standard for HD key generation in bitcoin is known as BIP 32. This standard uses a specific algorithm, known as the "HMAC-SHA512" algorithm, to derive keys. The algorithm takes the seed value as input, along with an additional value known as a "chain code," and outputs a 64-byte value. This value is then used as the basis for generating additional derived keys.
One of the key advantages of HD key generation is that it allows for the creation of multiple keys from a single seed value. This can be useful for managing multiple addresses or accounts in a secure manner, without the need to remember or store multiple passwords or private keys. Additionally, HD key generation also allows for the creation of a "backup" of the seed value, and use it to recover all the derived keys. This is useful in case the user lose access to their private keys or forget their password.
Another advantage of HD key generation is that it allows for the creation of a "hierarchy" of keys, with each level of the hierarchy representing a different level of access or security. For example, a user could have a "master" key at the root of the hierarchy, with additional "child" keys branching off from it. Each child key could be used for a different purpose, such as for online transactions or for cold storage.
In summary, hierarchical deterministic key generation is a method used in bitcoin and other cryptocurrencies to generate a tree-like structure of derived keys from a single seed value. The standard for HD key generation in bitcoin is BIP 32 which uses the HMAC-SHA512 algorithm to derive keys. HD key generation allows for the creation of multiple keys from a single seed value, enables the user to recover all the derived keys with the seed value and allows for the creation of a hierarchy of keys, each with different level of access or security.