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Deriving a tree of keypairs

Before going in to any details regarding key derivation, we need to understand the concept of extended keys properly. The concept of extended keys came into the picture to prevent the derived child keys from entirely depending on the parent key itself. The process for deriving the child keys is as follows:

1. Take the private and public parent key.
2. Extend the key with an extra 256-bit entropy, called chain code:

• • If the parent key is a private key, the extended private key will have the prefix xprv.
  • If the parent key is a public key, the extended public key will have the prefix xpub.

3. The extended keys will be used to produce the child key instead of the original private and public parent keys.

For key derivation, ...