Bitcoin improvement proposal number 32, or BIP 32, is one of the most significant improvements to Satoshi Nakamoto’s invention.

What is BIP 32 and what innovations has this update brought?

The BIP32 update was released in February 2012 and is the result of a proposal by Peter Wuille.

Before this date, you had to take care to save each public/private key pair for each of your bitcoin addresses separately. This was because these key pairs were not generated deterministically.

Needless to say that, for those who needed to generate numerous adresses, wheter to avoid storing all their funds on the same one, or because they had a heightened need for confidentiality (journalists, whistleblowers, etc.), generating dozens of adresses and saving the associated pairs of keys could quickly become a major problem.

BIP32 will introduce HD wallets, or Hierarchical Deterministic wallets. They are an essential upgrade to the Bitcoin ecosystem in that their integration will enable the generation of multiple « daughter » adresses from a single « mother » seed.

In fact, the same portfolio can now generate several accounts, and therefore several pairs of « private/public key » from the same seed.

This update has made life a lot easier for bitcoin holders.

Of course, having a single seed for multiple addresses makes it all the more essential to store it correctly, which is what Seedkeeper 🔗, our solution for backing up your recovery phrases 🔗, enables you to do.

Where do all the addresses you generate using a BIP32 wallet come from?

Quite simply, they are derivations from a single private master key.

These derived addresses are generated deterministically. This means that a master key will always generates the same daughter keys.

This point is crucial, as it allows you to find all your addresses after importing your seed into a new wallet, for example.. If you don’t have a deterministic generation, you won’t be able to recover all your adresses at once.

As mentioned above, this was one of the major difficulties that drove the investors of the time crazy, as they had to be careful to keep each pair of keys independently.

The slightest error could lead to you easily losing access to one of your addresses, with no hope of generating the same key pair again from your seedphrase. A major obstacle to mass adoption.

This is now history, and Satochip 🔗 is of course compatible with the BIP32 update.

The generation of keys and addresses via BIP32 is carried out using a family tree structure that organizes the generation of your private and public keys and each of your new addresses into branches and “families”.

This special structure also makes it easier to consult the overall balance of your accounts and sub-accounts.

For those of you with a particular interest in the mathematics behind the implementation of this update, we recommend this excellent Medium article 🔗.

Although this last point is a little more complex, remember that the major contribution of the BIP32 enhancement is the ability to generate multiple addresses from a single seed.

Speaking of Seeds, it’s the BIP39 🔗 update that will have made keeping them even simpler for investors