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What is BIP44?

Bitcoin Improvement Proposal 44, or BIP44, is a protocol that provides a structured method for creating and organizing keys in a deterministic wallet. BIP44 is an extension of BIP32, which introduced the concept of Hierarchical Deterministic (HD) wallets, and BIP39, which outlined a method for creating a mnemonic sentence as a backup recovery seed. BIP44 puts forth a specific hierarchy for wallet structures that improves organization, utility, and compatibility.

Where did BIP44 come from?

BIP44 was proposed by Marek Palatinus (known as "Slush") and Pavol Rusnak (also known as "Stick"), co-founders of SatoshiLabs and developers of the Trezor hardware wallet. BIP44 was introduced to supplement BIP32, which lacked a defined structure for account discovery and creation.

How does BIP44 Work?

The BIP44 standard provides a systematic method for creating multiple accounts and addresses within a single wallet. It uses the concept of a "path" that informs a wallet how to derive keys from a root seed.

The derivation path used in BIP44 follows this structure: m / purpose' / coin_type' / account' / change / address_index

Each element in the path has a specific meaning:

  • m: This is the master node and represents the root of your HD wallet.
  • purpose': Always set to 44' for BIP44 compliant wallets.
  • coin_type': Specifies the type of cryptocurrency. Each cryptocurrency has a specific number assigned, such as 0' for Bitcoin and 60' for Ethereum.
  • account': A BIP44 wallet can have multiple accounts, and this number represents each unique account.
  • change: This is either 0 for external (receiving) addresses or 1 for internal (change) addresses.
  • address_index: Represents the individual addresses generated under each account.

Using the BIP44 protocol, users can manage multiple coins, accounts, and addresses under a single master seed, created using the BIP39 protocol.

BIP44 and Trezor

Trezor hardware wallets adopt BIP44, using it to create a structured, organized system of accounts and addresses for different cryptocurrencies. When you set up your Trezor wallet, a single 12, 18, or 24-word recovery seed is created using BIP39. This seed is the starting point for the BIP44 path.

By applying the BIP44 protocol, Trezor enables users to handle multiple accounts and addresses for different cryptocurrencies, all under a single recovery seed. When you add new accounts or addresses, they are systematically organized based on the BIP44 path.

Moreover, the BIP44 standard also allows for interoperability between different wallets. For instance, if you decide to switch from Trezor to another wallet provider that supports BIP44, you can import your accounts using your recovery seed and the same account structure and addresses will be generated on the new wallet.

BIP44 is a critical enhancement to the HD wallets standard, providing an optimal organization structure for wallets and facilitating a more user-friendly experience. By integrating BIP44, Trezor enhances usability and interoperability of its hardware wallets, allowing users to handle multiple cryptocurrencies in a systematic manner.