Understanding Hardware Wallets
Introduction In the world of cryptocurrency, managing multiple accounts securely and conveniently is paramount. Hardware wallets, such as the Ledger , SafePal and others, achieve this by utilizing a single seed phrase to manage multiple accounts. This is made possible through a concept called hierarchical deterministic (HD) wallets. In this article, we will explore the mechanics of path derivation and touch on the extent of security if the connected computer or browser wallet is compromised. Path Derivation: The Core of HD Wallets Path derivation is a method used in HD wallets to generate multiple key pairs from a single seed phrase. Each account in an HD wallet is derived from a master private key using a specific derivation path. This allows for the creation of a structured tree of key pairs, enabling a single seed phrase to manage numerous accounts. How Does It Work? When you initialize your hardware wallet, a seed phrase (12, 18, or 24 words) is generated. This seed phra