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Author Topic: What is the advantage of HD Wallets?  (Read 87 times)
deletedcoin
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September 14, 2018, 09:20:15 AM
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I have read man resources and questions about HD Wallets. As pointed out in this question on SO https://bitcoin.stackexchange.com/questions/73376/a-few-questions-about-how-hd-wallet-works, it won't be possible to send funds of a derived child address using the master private key.

In my humble opinion exactly this would make sense if I could create a derived child to receive funds for a specific purpose but being able to spend these funds using my master private key without the need to store each child private key.

Do I miss something here? Why should I use HD wallets if I still need to store each single local private key as well?
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September 14, 2018, 09:27:22 AM
Merited by suchmoon (4)
 #2

Why should I use HD wallets if I still need to store each single local private key as well?
I think you're overthinking it Wink
Storing private keys isn't a problem, your wallet takes care of that for you. The best thing about an HD wallet is that you only have to create a backup once. With a non-HD wallet, you'll need to create a new backup each time your wallet creates a (batch of) new private key(s).

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September 14, 2018, 10:11:54 AM
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Do I miss something here? Why should I use HD wallets if I still need to store each single local private key as well?
So it seems like you've misunderstood this part:
Quote
Each address derived by an HD wallet looks just like any other bitcoin address, there is no way to know it came from an HD wallet. So in order to spend the UTXO, you need to present a signature made by the private key of that specific address. The network does not know that your address was derived from an xrpiv key, so if you use your xpriv key to sign the transaction, it will be invalid.

The comment is based on the OP's 3rd question which is: "Do we use master private key to sign every transaction?" he actually nailed it.

To put it simple, as you know it (Hierarchical Deterministic) HD Wallet has a Master Private key where all of your addresses's private keys were based from.
The client (ex. Bitcoin Core/Electrum/Multibit) where it was created or supported can restore all those required private keys to spend the previous UTXO, your client does that automatically for you.
The only backup you need is the Master Private or the SEED, each private keys are only optional.

Also, I think that there are more information provided in the comments from the link you provided (small fonts with numbers), look again.

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September 14, 2018, 10:23:56 AM
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The point is.. you don't need to store the child private key anywhere.
It is correct that you need it to sign transaction from child public keys. But it can always be derived using the master private key.

The big advantage with this is that you only need the master private key to gain access to all of your child private keys. This simplifies the whole backup process a lot.


With old fashioned wallets, you need to back it up regularly since these contain X unused private-/public- keypairs (called: address gap).
Each time new private keys are attached to this wallet, you need to back it up to ensure you'll not lose access to these private keys.

This does no longer apply to HD wallets. You only need the xpriv (which can be backed up upon creating the wallet) to derive all future private keys.

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September 14, 2018, 02:06:13 PM
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Do I miss something here? Why should I use HD wallets if I still need to store each single local private key as well?
the main purpose of HD wallet is to have ability for easy one-time backup by saving the mnemonic seed or xpriv
all the neccessary process of generating, storing and signing are taken care by the wallet
you don't need to manually store/save every single private keys, unlike non-HD wallets
addresses(/keys) in non-HD wallets are generated completely random, so you have to backup periodically

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September 15, 2018, 09:55:56 AM
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Thank you very much each other! I think I have understand now completely!
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September 17, 2018, 09:09:28 PM
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Here is a good article that might have your answers

https://coinsutra.com/hd-wallets-deterministic-wallet/
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September 22, 2018, 03:04:32 PM
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Some people consider HD wallets insecure, because knowing some of the keys could lead to key derivation. I've heard master public key + some public keys would be enough to get the seed or something.

Im too paranoid to use Electrum as cold storage because of that. I don't need to know the details (I would like to tho), it just doesn't seem very bright to store the coins in such a system. Separate private keys is better. Just keep making backups and keep them safe.

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September 22, 2018, 03:14:00 PM
 #9

I've heard master public key + some public private keys would be enough to get the seed or something.
I've edited your quote a bit. As far as I know, this is how it works.

Quote
I don't need to know the details
Disclaimer: I don't know the the details either. "Just random" is much easier to understand, and my Bitcoin Core still uses that.

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