Key Derivation

2 min read

Pronunciation

[kee der-uh-vey-shuhn]

Analogy

Think of key derivation as a special recipe that transforms simple ingredients (like a ) into complex dishes (cryptographic keys). Just as a chef can reliably create the same signature dish each time by following an exact recipe with the same ingredients, key derivation algorithms produce identical keys when given the same starting materials and parameters. Different derivation "recipes" can create different "flavor profiles" of keys for various purposes, but all trace back to the original ingredients.

Definition

The cryptographic process of generating new keys from existing key material using algorithms. In contexts, key derivation enables the creation of hierarchical structures, transforming user-friendly inputs like passphrases into secure cryptographic keys, and establishing mathematical relationships between keys to enable backup and recovery from minimal information.

Key Points Intro

Key derivation serves multiple critical functions in security infrastructure.

Key Points

Determinism: Produces identical output keys when provided with the same input values and parameters.

Cryptographic strength: Employs one-way functions that make it computationally infeasible to reverse the process and determine input values from derived keys.

Structural relationships: Creates mathematical connections between keys that enable organizational hierarchies while maintaining security boundaries.

Parameter-driven: Uses variables like indices, paths, and derivation constants to generate different keys from the same base material.

Example

When Alice sets up her with the "apple banana cat...", the first derives a master key using and -SHA512 functions. From this master key, the derives separate child keys for different cryptocurrencies—one path for , another for . When Alice wants to receive , the derives a new unique using the next available index in the receiving path. All these different keys—master key, -specific keys, and individual keys—are mathematically linked through the derivation process, allowing everything to be recalculated from just the original .

Technical Deep Dive

key derivation typically involves several distinct processes. First, seed derivation transforms mnemonic phrases and optional passphrases into seeds using with 2048 rounds of -SHA512 (in ). Master key derivation then applies -SHA512 to this seed using "Bitcoin seed" as the key, producing the master and chain code. Hierarchical derivation (BIP-32) uses -SHA512 with parent information (private or , depending on derivation type), chain code, and an index to create child keys. The derivation function produces 512 bits, with the first 256 bits added to the parent (modulo the curve order) to produce the child , and the remaining 256 bits becoming the new chain code. Hardened derivation incorporates the parent in the , while normal derivation uses the parent , enabling public derivation. Path-based derivation follows standardized structures like (m/purpose'/coin_type'/account'/change/address_index) to organize keys by , account, and function.

Security Warning

Derivation functions are designed to be one-way, but weaknesses in implementation or insufficient entropy in source material can compromise security. Ensure your uses standard, audited derivation implementations rather than custom algorithms. Be aware that knowledge of both a child and its parent's could potentially compromise other children in non-hardened derivation. For critical security boundaries, always use hardened derivation (indicated by ' in paths, e.g., m/44'/0').

Caveat

While key derivation creates convenient hierarchies and backup solutions, it also introduces complexity and potential compatibility issues between different implementations. Non-standard derivation paths may cause recovery problems when changing software. Additionally, the security of all derived keys ultimately depends on the entropy and security of the seed material—deriving numerous keys doesn't improve security if the original seed was compromised or generated with insufficient randomness.

Related Terms

Hierarchical Deterministic Wallet

Blockchain & Cryptocurrency Glossary

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