BIP-44

2 min read

Pronunciation

[bip fawr-tee fohr]

Analogy

Think of BIP-44 as a standardized filing system for the key-making factory (BIP-32). While provides the blueprint for making keys, BIP-44 tells you exactly how to label and organize those keys into different cabinets (cryptocurrencies), drawers (user accounts), and folders (external/internal addresses) so that any compatible can find and use them correctly. It ensures consistent organization across different brands.

Definition

Improvement Proposal 44 (BIP-44) defines a specific standard for Hierarchical (HD) wallets based on and using mnemonics from . It specifies a multi-account, multi-coin hierarchy, allowing wallets to support various cryptocurrencies and multiple accounts per coin from a single in a structured way.

Key Points Intro

BIP-44 provides a standardized structure for derivation paths in HD wallets, enabling consistent multi-coin and multi-account support.

Key Points

Defined Path Structure: Specifies a 5-level path: m / purpose' / coin_type' / account' / change / address_index.

Purpose Field: Set to 44' (or 0x8000002C) to signify BIP-44 compatibility.

Coin Type Field: Assigns a unique ID for each cryptocurrency (e.g., 0' for Bitcoin, 60' for Ethereum).

Multi-Account & Multi-Coin: Allows a single seed to manage distinct accounts for multiple cryptocurrencies.

Example

A user has a that follows BIP-44. Their account's first external might be derived using the path m/44'/0'/0'/0/0. Their account's first would use m/44'/60'/0'/0/0. This standardized structure allows the user to restore their using their on any other BIP-44 compatible and see all their different crypto assets and accounts correctly.

Technical Deep Dive

The BIP-44 path structure is m/purpose'/coin_type'/account'/change/address_index. - `purpose'`: Always 44' for BIP-44. The apostrophe indicates hardened derivation. - `coin_type'`: Specifies the , registered in SLIP-0044 (e.g., is 0', is 60'). Hardened. - `account'`: Allows users to segment their wallets into separate logical accounts (e.g., 'savings', 'trading'). Starts at 0'. Hardened. - `change`: Identifies external (0, customer-facing addresses) or internal (1, change addresses, not typically shown to users) chains. Not hardened. - `address_index`: The sequential index of the within the chain. Starts at 0. Not hardened. All levels from purpose' to account' use hardened derivation to enhance security between different accounts or coin types.

Security Warning

While BIP-44 standardizes paths, ensuring a actually adheres to it is important for interoperability. The security still fundamentally relies on the secrecy of the used to generate the master seed.

Caveat

Not all cryptocurrencies or wallets strictly adhere to BIP-44, or they might use it as a and add further non-standard derivation levels. This can sometimes lead to issues when migrating seeds between different software if custom paths are not supported or recognized. Always check documentation for supported derivation paths.

Related Terms

Blockchain & Cryptocurrency Glossary

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