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What is a Bitcoin HD Wallet?

HD is short for Hierarchical Deterministic.

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Usually, bitcoin wallets create a new bitcoin address from a unique random number. That process requires you to make a new separate backup each time you create a new address.

HD hwallets however use a single bitcoin address for all transactions.

mycelium bitcoin walletHD wallets, like Mycelium, use a master seed. the seed is usually based on random words created on initial installation and is used to originate all future bitcoin addresses.

Each new address is created by attaching a counter to the end of the seed. This way, all the bitcoin addresses created are hierarchically determined (HD) from a single seed.

The big advantage of HD wallets is that you only have to backup once and not every time you add an address to your wallet. And, you can restore your entire wallet from the master seed.

Remember that all bitcoin addresses are public, so HD wallets also improve your privacy by generating new addresses whenever you send and receive funds. This makes it hard to track your activity and bitcoin balance.

You can read more about Bitcoin web wallets here.

You can read more Bitcoin mobile wallets here.

You can read more about Bitcoin Desktop wallets here.

You can read more about Bitcoin Hardware wallets here.

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