Having multiple wallets for various crypto needs is commonplace. However, what often makes you confused is how to back them all up without any hassle.

Each wallet has its own private key, and if one is lost, it could be a disaster. However, it turns out that just 1 seed is enough to manage everything. So, how do you do it?

This is the role of BIP-32, the smart standard that is the foundation of modern crypto wallets. With BIP-32, one seed phrase can generate multiple wallet addresses hierarchically and structured without having to store multiple private keys.

This is certainly a practical, safe, and efficient solution for those of you who want to stay organized in managing assets in the crypto world. To better understand BIP-32, see the following review.

What is BIP-32? Smart Standard for Crypto Wallets

Nowadays, using a crypto wallet seems very easy, just download the application, create a wallet, and you can immediately receive or send digital assets. However, in the early days of Bitcoin, things were not that simple.

Users had to store many key pairs (private and public keys) manually and if one was lost, the assets could be lost without being able to be recovered.

So, as the crypto community grew, there was a need for a more efficient, secure, and easy-to-use system.

This is where Bitcoin Improvement Proposal 32 (BIP-32) came in as a solution. Introduced in 2012 by Pieter Wuille, a Bitcoin core developer, BIP-32 introduced the concept of Hierarchical Deterministic (HD) wallets.

Although it sounds technical, the essence of this innovation is very simple, namely making crypto wallet management much more practical and easy to recover.

Before BIP-32, wallets were non-deterministic. Each wallet address was randomly generated and not connected to each other. This meant that every time you wanted to create a new wallet, you had to record and store a completely new pair of keys.

Imagine if you have 10 different accounts, that means you have to store 20 codes that have nothing to do with each other. Difficult? Of course.

Well, BIP-32 is here to change all that. With this standard, just one master seed is enough to generate the entire crypto key structure in an organized manner in the form of a deterministic tree.

This master seed is the main source that can derive many derivative keys, both public and private keys, with a clear order and structure. This is what makes HD wallets so revolutionary.

With one seed phrase, you can generate many addresses for various needs, without having to store each key manually. In addition, the wallet recovery process becomes much easier.

If you lose your wallet, you can simply use the seed phrase to restore your entire wallet structure, complete with all accounts and transactions.

Basically, BIP-32 is a smart standard that is the foundation of modern crypto wallets.

It not only makes managing multiple addresses efficient, but also allows users to be more relaxed because they only rely on one seed to keep everything safe.

Also read related articles: Getting to Know HD Wallet: Advanced Hierarchical Structure to Manage Crypto Assets

How BIP-32 Works: From 1 Master Key to Thousands of Addresses

Imagine planting a big tree. From one main trunk, many branches grow, then from those branches appear smaller branches.

That’s how BIP-32 works, a standard that makes one master key capable of generating thousands of wallet addresses in a structured and efficient manner.

In the technical world, this process is called key derivation. In HD (Hierarchical Deterministic) wallets that follow BIP-32, all wallet addresses and crypto keys come from one main source called the master private key or root key.

From this one root, the system can “derive” new keys sequentially, called child keys, then from the child keys can be generated grandchild keys, and so on.

All of these derivatives are generated deterministically, meaning that as long as you have the master key or seed, you can retrieve the entire wallet structure, address by address, in exactly the same order.

Interestingly, you can generate a public key without having to reveal the private key so that privacy is maintained. The structure used by BIP-32 is hierarchical, like a branching tree.

For example, you can create one “branch” for personal use, another branch for business, and each can have its own sub-account (branch). Everything remains in one wallet connected to the same seed.

This is what makes BIP-32-based wallets very efficient and flexible. No need to manually record and store each key pair.

Just save one seed phrase, and you can easily restore the entire wallet, complete with all accounts and transaction history.

With BIP-32, one root can support thousands of addresses. Practical, safe, and ready for today’s crypto needs.

You might also be interested in this: Best Web3 Crypto Wallet? Try SafePal First!

BIP-32, BIP-39, and Seed Phrase: What’s the Difference?

Behind the practical and secure modern crypto wallets, there are technical standards that work in an integrated manner, namely BIP-39 and BIP-32.

The two are often mentioned together because they complement each other in forming an efficient, flexible, and easily recoverable wallet system. However, what exactly is the difference in their roles?

Let’s start with BIP-39. This standard is responsible for the process of forming a seed phrase, which is a series of words that usually consist of 12, 18, or 24 random words.

This seed phrase is actually generated from random entropy, which is then converted into a mnemonic code so that it is easy for humans to remember.

So, the main function of BIP-39 is to provide a standard way to create a seed phrase and convert it back into a binary seed that can be used by the wallet.

Now, after the seed phrase is formed, BIP-32 begins to carry out its function. BIP-32 uses the seed as a starting point to build a wallet structure called a Hierarchical Deterministic (HD) wallet. From one seed phrase, BIP-32 can generate thousands of wallet addresses in a structured manner, similar to a tree with one root and many branches.

Each branch can represent a different account, sub-account, or new wallet, all still connected to one main seed.

As a real example, hardware such as Trezor combines BIP-39 and BIP-32 in its system. When you initialize the Trezor device, the system will generate a seed phrase according to the BIP-39 standard.

This seed is then used as a “master key” by BIP-32 to build the entire wallet structure. So, every time you create a new account or address, BIP-32 will derive it from the same master key, without having to create a new key from scratch.

The main advantage of the integration of BIP-39 and BIP-32 is the efficiency of backup, namely, you only need to save one seed phrase to restore the entire wallet and all the addresses in it.

In addition, this system also supports privacy and flexibility because users can create new addresses for each transaction without leaking the master key, and manage multiple accounts within the same wallet framework.

In short, BIP-39 creates the seed, and BIP-32 builds the wallet tree. Both are the main foundations of a modern crypto wallet that is secure, practical, and user-friendly.

Which Wallets Use BIP-32?

The BIP-32 standard has become the foundation for many modern crypto wallets due to its ability to securely and efficiently manage multiple addresses with a single seed phrase.

It is no wonder that many popular wallets have adopted this standard as their primary key management system. Some real-world examples of wallets that use BIP-32 include:

• MetaMask, a browser-based wallet that is widely used to access decentralized applications (dApps) on the Ethereum network and other compatible ones.
• Ledger and Trezor, two leading hardware wallets known for their high levels of security, both build their wallet structures based on BIP-32 and BIP-39.
• Trust Wallet, a multichain mobile wallet that has also adopted this standard to allow users to store and manage multiple assets with just a single seed phrase.

The use of BIP-32 by these major wallets shows the high level of trust in this standard in the industry.

In addition to providing efficiency in managing multiple addresses, BIP-32 also supports privacy and simplifies the wallet recovery process, which are two important things in the world of digital assets.

With just one seed phrase, you can backup and restore all your wallet addresses on the platform without having to store multiple keys manually.

The Advantages of BIP-32 for You

Using a BIP-32-based wallet provides many advantages for crypto users, especially in terms of convenience, security, and privacy. Here are some of the main advantages that you can immediately feel, namely:

1. One backup for all assets

With BIP-32, you only need to store one seed phrase to back up your entire wallet.

This means that all addresses and assets you have can be restored from just one point. This makes the backup process much more practical and secure, without having to store multiple keys separately.

2. Different addresses for each transaction

Every time you make a transaction, BIP-32 allows for the automatic creation of a new address. This increases privacy, because your transaction history is not centered on one address, making it more difficult for outsiders to track.

3. Neat and organized wallet structure

BIP-32 forms a hierarchical wallet, like a branching tree so you can separate addresses for investment, shopping, donations, or business, all still connected to one seed phrase.

Are There Any Risks Too? This is What You Need to Watch Out For

Although BIP-32 offers convenience and efficiency, there are still risks that you need to be aware of.

Because all wallet addresses come from one seed phrase, if the seed phrase is leaked, all connected assets are at risk, no matter how many addresses you have.

In addition, BIP-32 also recognizes two types of key derivation, namely hardened and non-hardened.

Non-hardened keys allow derived public keys to be created from the parent public key, without the need for access to the private key—practical, but less secure if the root key is not properly protected.

On the other hand, hardened keys can only be created with access to the parent private key, making them more secure, but requiring more careful management.

Therefore, manual offline backups are very important. Store the seed phrase in a safe place and keep it completely secret from anyone.

Avoid storing it on online devices or the cloud to reduce the risk of theft. Remember, one seed phrase = all keys.

Conclusion: Smart Technology Behind Your Seed

So, that was an interesting discussion about One Seed, All Assets Are Safe: Let’s Get to Know BIP-32 which you can read in full at the Crypto Academy at INDODAX Academy.

In conclusion, now you know that one seed phrase can be the key to all addresses, all assets, and all wallets that you have.

Behind that convenience, there is smart technology like BIP-32 that makes everything possible, namely structured, efficient, and safe.

As a crypto user, it is important to not only understand how to send and receive assets, but also to be aware of the structure of the wallet you are using. That way, you can manage digital assets more wisely and protected.

Oh yes, in addition to expanding your investment and security insights in the crypto world, you can also stay updated with the latest crypto news and directly monitor the price movements of digital assets on the INDODAX Market. Don’t forget to activate notifications so that you always get the latest information about digital assets and blockchain technology only at INDODAX Academy.

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FAQ

1. What is BIP-32 in crypto wallets?
BIP-32 is a standard that allows a single seed phrase to generate multiple wallet addresses in a hierarchical and structured manner.

2.Why does BIP-32 make wallet backup easier?
Because one seed phrase is enough to restore all connected wallet addresses, without having to store many manual private keys.

3.Do all crypto wallets use BIP-32?
Not all, but popular wallets such as MetaMask, Ledger, Trezor, and Trust Wallet have adopted it.

4.What is the difference between BIP-32 and BIP-39?
BIP-39 creates the seed phrase, while BIP-32 uses the seed to form the HD wallet structure.

5.What are the main risks of using a BIP-32 wallet?
If the seed phrase is leaked, all connected addresses can be compromised. Therefore, it is important to backup the seed offline and secretly.

Author: Boy