Hierarchical Deterministic Wallet
The legacy of Non-Deterministic wallet and HD wallet combined resolves into flexibility for end-user with interoperability and enhanced privacy with one-time backup.
Trezor is one of the first Hierarchical-Deterministic-Wallets brought to the market.
See also: Address path, Non-deterministic wallet, Cryptocurrency standards
What are the advantages of HD wallets?
HD wallets solve problems of legacy cryptocurrency wallets which randomly generate private keys on the fly and require repeated backups; insanity!HD wallets bring the possibility of deriving all the addresses (public and Private-Key pairs) from a single Recovery Seed.
This means an HD wallet needs only one backup.
The advantages of hierarchical deterministic wallets over standard cryptocurrency wallets are:
- Easy backups - if you control the recovery seed, you can generate the entire tree of children keys (public/private key pairs).
- Storing your private keys offline - possibility to derive the entire tree of public keys (addresses) from a parent public key without needing any private keys.
- Access controls - Hierarchical deterministic wallets are arranged in a tree formation. The owner of the master seed controls all assets in the wallet and can create whole branches of keypairs if he or she wants to let someone spend only part of the coins in the wallet.
- Accounting - The owner of the master seed can create public keys at any level of a wallet tree formation to let someone access the transaction history of a specific part of the wallet.
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