Hierarchical Determination

Hierarchical Determination is a security and convenience feature that is used by some self-custody wallets. In an hierarchical deterministic (HD) wallet, a single master seed phrase is used to generate a hierarchy of private keys. This allows the user to create multiple public addresses for receiving and sending transactions, while still being able to use a single, easy-to-remember seed to back up and restore the wallet.

The hierarchical structure of an HD wallet allows for better security and ease of use. Because the wallet is derived from a single master seed, it is easy to back up and restore, and the user only needs to remember a single seed phrase in order to access their funds. The use of multiple private and public keys allows for better security, as it means that not all of the user's funds are stored in a single address.