Key derivation in HD wallets using the extended private key vs hardened derivation
Key derivation in HD wallets using the extended private key vs hardened derivation I am reading the book Mastering Bitcoin and confused about wallet key derivations in Chapter 4. Keys, Addresses, Wallets . The book first mentions a private child key derivation where the child private key is derived from three inputs: (parent public key previously derived from parent private key, parent chain code, index). Next, the book discusses extended keys and mentions two types: extended private keys and extended public keys. The extended public keys are used to derive children public keys from parents public keys to avoid exposing the private keys, hence more secure. This is the block diagram for the extended public key . On the other hand, the book mentions that the extended private key is used to derive a child's private key using the parent's private key and chain code. However, although the extended public key does not expose the private key, it is still risky to use since it e...