HD Wallet


A Hierarchical Deterministic Wallet is the term used to describe a wallet which uses a seed to derive keys. Hierarchy describes the tree-like structure of the keys: A master key is used to derive child keys, each which can derive their own children indefinitely, if needed. This tree is deterministic: a given seed or master key will always generate the exact same tree of keys. This allows users to back up a single seed instead of hundreds of keys.

A seed is usually represented to users as a mnemonic phrase, a 12-24 list of random words. This makes it even easier to backup an entire wallet.