Saving the Derivation Path: An Important Consideration for Bitcoin Users
When it comes to securing your Bitcoin wallet, understanding how the blockchain works and stores sensitive information is crucial. One often overlooked aspect of this security is the Derivation Path used by the Bitcoin blockchain. In this article, we’ll explore why storing the Derivation Path with your paper wallet’s seed phrase is so important and provide guidance on how to do it.
What is a Derivation Path?
A Derivation Path is a series of operations (public key, script, address) that lead from the Genesis Block (the first block in the Bitcoin blockchain) to a specific public address. In other words, it’s a way to “derive” or generate new addresses based on an existing public address.
Why do you need the derivation path?
Without knowing the derivation path, you are at the mercy of someone else who has access to your seed phrase and private key. If they were to use your seed phrase to create multiple wallets, they could potentially gain control of all of your Bitcoin assets. By storing the derivation path with your paper wallet seed phrase, you can ensure that only one wallet has access to your funds.
How to store the derivation path
To store the derivation path, follow these steps:
- Generate a new private key: Before generating a public address, create a new private key using your computer’s cryptography library (e.g. OpenSSL). This private key will be used to derive other addresses and keys.
- Create a script file: Write a script that prints the derivation path for each of your public addresses. You can use a programming language like C or Python to generate this script.
- Save the script as a file: Save the script file with a name that includes your seed phrase (e.g., “seed_phrase.dpk”). This will make it easy to load and verify the derivation path later.
- Create a seed phrase for your paper wallet: Generate a new seed phrase for your paper wallet using your computer’s cryptographic library. Paste the seed phrase, public key, and any other relevant information into the seed phrase file.
- Combine the script and seed phrase files: Combine the script file with the seed phrase file to create a single archive (e.g., a
.zipfile).
Best Practices
- Use a secure method to store your seed phrase and private key, such as a hardware wallet or secure online storage service.
- Keep your paper wallet seed phrase confidential and do not share it with anyone else.
- Consider using a trusted third-party service to generate and manage your seed phrase and derivation path.
Conclusion
Saving the derivation path with your paper wallet seed phrase is essential to securing your Bitcoin wallet. By following these steps, you can ensure that only one wallet has access to your funds and protect yourself from unauthorized access. Remember to use secure storage methods and consider using a trusted third-party service to manage your private key and derivation path.