An HD wallet, also known as a Hierarchical Deterministic wallet, is a type of crypto wallet that automatically generates public/private keys, so the user doesn’t have to generate their own. Some examples of blockchains that use this type of wallet architecture are Avalanche, Bitcoin, and Bitcoin Cash.
HD wallets are unique in that they contain one master seed phrase and then all of the public keys that are generated are linked to that one seed phrase. The advantages of this include increased security, privacy, and improved key management.
HD wallet structure looks something like this:
- Master seed phrase
- Public Address #1
- Public Address #2
- Public Address #3