8 docs tagged with "private keys"

A derivation path determines how your private keys are derived from your seed phrase and which addresses are generated from those keys.

The extended private key is derived from the binary private key (along with an optional passphrase) using mathematical functions that most users don’t need to understand in detail.

The purpose of the extended public key (xpub) might not be immediately obvious. Looking at the bottom section of the diagram, you’ll see that possessing the extended public key allows wallet software to generate all the same Bitcoin addresses as the extended private key—in the same order. This means the wallet will look identical in terms of addresses and transaction history. But what’s the key difference?

Private keys are essential because they give you full control over your funds, and losing or exposing them can result in loss of access or theft. I recommend following this section step by step, as it's a foundational concept, and doing so will give you a much clearer understanding.

Before diving into Bitcoin private keys, it’s important to understand how different number systems work.

A passphrase is an additional security layer. Unlike your seed phrase (which consists of predefined words from the BIP39 word list), a passphrase can be any combination of characters.

Writing down a binary private key accurately is difficult for humans, and entering it correctly into a wallet is even harder. A single mistake could lead to losing Bitcoin. While a computer can detect errors using a checksum, handwritten notes cannot.

A private key starts as a binary number. While it can be converted into different formats, at its core, it remains a binary number because that’s what computers understand.