Hierarchical Deterministic Wallets.

BIP-32

• Key derivation
  • Extended key: In order to prevent these from depending solely on the key itself. extra 256 bits of entropy(chain code is identical for corresponding private and public keys).
  • Child key derivation (CKD) functions
    1. Private parent key

       1. private child key

          let I
          IF index ≥ 2^31 (hardened key)
            I = HMAC-SHA512(parent_private_key, chaincode)
          ****ELSE
            I = HMAC-SHA512(parent_public_key, chaincode)
          
          I_l, I_r = I.split()
          child_private_key = I_l
          child_chaincode = I_r
          

       2. public child key (neutered)

    2. Public parent key

       1. public child key

          If index **≥** 2^31 (hardened key)
            return failure
          ELSE
            HMAC-SHA512(parent_public_key, chaincode)
            
          // same as the above.
          

       2. private child key: Not possible.

  • Key identifiers
    • Hash160
    • the fingerprint of the parent only serves as a fast way to detect parent and child nodes
  • Master key generation: seed or mnemonic → HMAC-SHA512 → $(I_l, I_r)$