What is an HD Wallet?

HD Wallets in Bitpanda Custody

Bitpanda Custody uses Hierarchical Deterministic (HD) wallets to provide secure, scalable private key management. Each client is assigned a unique seed, generated by a Hardware Security Module (HSM), ensuring complete cryptographic segregation within our TrustVault platform.

HD wallets deterministically derive a hierarchy of keys from this seed using industry standards (BIP-32, BIP-39, BIP-44). All key material for a client is derived from their dedicated seed, allowing structured key management without cross-client exposure.

Key Features

  • Client Isolation: Unique seed per client, securely stored in DynamoDB
  • Structured Derivation: Paths segment use cases like trading or issuance
  • Backup and Recovery: Encrypted seed backups ensure continuity
  • Compatibility: Supports multi-signature and industry interoperability
  • Auditability: Deterministic derivation enables transparent key lineage

Internal Use of Derivation Paths

Within a client’s HD tree, paths help structure keys by:

  • Network (e.g. Ethereum mainnet vs testnet)
  • Asset type (e.g. native ETH vs ERC-20)
  • Function (e.g. fee collection, contract deployment)

Access control is handled at the orchestration level, not through path structure.

Example Derivation Paths

PurposeExample Path
Ethereum Walletm/44'/60'/0'/0/0
Internal Changem/44'/60'/0'/1/3
Contract Deploymentm/44'/60'/1001'/0/0

Standards

We follow BIP-32, BIP-39, BIP-44, and SLIP-44. Custom paths can be defined to meet institutional needs.

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