Hierarchical Deterministic Wallet (HD Wallet)
A new-age digital wallet, the Hierarchical Deterministic Wallet or simply, HD Wallet is responsible for automatically generating private or public keys or addresses in a hierarchical structure. As this is the case, the users no longer have to generate the addresses by themselves.
An HD wallet resolves all the intricacies that come with using a standard cryptocurrency wallet through the derivation of all addresses from a master seed. HD wallets make use of a variant of the standard 12-word master seed key. Upon extension of the seed from the counter value’s end, automatic derivation of an unlimited amount of new addresses is made possible.
What HD Wallets ultimately do is let go of the necessity of always having to generate security keys, hence doing away with taking backups.