Crypto glossary
HD wallet (hierarchical deterministic)
An HD wallet derives an unlimited tree of keys and addresses from a single seed, so one backup restores every account, using the BIP-32 standard.
Early Bitcoin wallets generated independent random keys, so users had to back up the wallet file again after creating new addresses. Hierarchical deterministic wallets, standardised in BIP-32 in 2012, fixed that. A master key is derived from one seed, and child keys are derived from it in a tree structure following paths such as m/84'/0'/0'/0/5. The same seed always produces the same keys.
That design underpins almost every modern wallet. Users back up a single seed phrase and can restore all accounts and addresses on any compatible app. Wallets can generate a fresh receiving address for every payment, improving privacy, and accounts can be organised by coin, purpose or use. Extended public keys let watch-only software derive addresses without access to spending keys.
The seed becomes a single point of failure: whoever obtains it controls every derived key. Some derivation modes have subtle risks; with non-hardened derivation, leaking one child private key together with the parent extended public key can expose the parent's private key. Restoring in a different wallet may require choosing the right derivation path.
Example
A user restores their 24-word seed in a new wallet after losing their phone; the app regenerates the same addresses, finds their transaction history and shows the full balance.