Clear DefinitionsDerivation Path
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Pronunciation
[dee-ri-vey-shun path]
Analogy
A derivation path is like a folder path on your computer—it specifies exactly where to find a particular file (key) in a structured hierarchy.
Definition
A hierarchical notation defining how keys and addresses are deterministically derived from a master seed in HD wallets.
Key Points Intro
Derivation paths organize keys through:
Key Points
BIP‑32 format: Uses notation m/ purpose'/coin'/account'/change/index.
Hardened vs non‑hardened: Apostrophe denotes hardened derivation.
Interoperability: Standard paths ensure wallet compatibility.
Multiple accounts: Separate branches for different uses.
Example
The common Ethereum path m/44'/60'/0'/0/0 yields the first account’s private key from a BIP‑39 seed.
Technical Deep Dive
HD wallets implement HMAC‑SHA512 on parent key and chain code with index. Hardened derivation uses private key in HMAC; non‑hardened uses public key. The resulting 512‑bit output splits into new key and chain code.
Security Warning
Exposing non‑hardened public extended keys (xpub) can allow address generation but not key compromise; exposing private extended keys (xprv) is catastrophic.
Caveat
Different wallets use different default paths; ensure matching path when importing seed.
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