Hierarchical Deterministic or HD wallets are modern digital wallets that produce public or private keys in a tree-like structure. An HD wallet performs similar functions to a standard crypto wallet. However, standard wallets will provide public keys that expire after a given period and are then replaced with other keys. By using a reproducible OS code via an SHA-256 hash algorithm, the HD wallets produce a tree structure of children addresses. This relieves the users from having to create new addresses or tirelessly wait for the private keys to be generated for every transaction and grants them full control over their assets.
A typical HD wallet uses a 12 or 24-word master seed key for address generation, and the seed extends at the end by a counter value to produce an unrestricted number of new keys. The seed key backup is mandatory for safety and recovery in HD wallets because it lets users restore their wallets in case of damage or loss.
Here are some of HD wallet advantages:
- Full control over the funds
- Top security level
- Maximum anonymity
- Ease of use
- The ability to transfer the master key to another device or wallet
- Full recovery of addresses and keys using the master key
Even though HD wallets feature a lot of benefits, they still have a number of significant disadvantages:
- The responsibility for the wallet and the safety of the funds lies entirely with the user
- No access to the wallet in the event of the loss of the master key and mnemonic phrase
- Tightening regulations worldwide on most legal exchanges
Cryptocurrencies are becoming recognized as means of payment and assets in many countries, and that the crypto market is beginning to be actively regulated. Therefore, the storage and management of cryptocurrency will soon resemble a digital cell, the contents of which belongs to the user. Yet, the access to the cell itself can be blocked or temporarily suspended by a regulator.
Access to the crypto-container will be provided using cryptographic algorithms, key exchange protocols, and digital signature verification. There, the master key will be stored, transactions will be prescribed, and the client will approve and verify them using a digital signature and a private key.
Grapherex Wallet
Grapherex is a super app that combines the functions of a messenger, a P2P crypto exchange, and a wallet. It makes private communication straightforward and more effective for its users while enabling them to securely store the majority of the most popular cryptocurrencies.
It’s impossible to overestimate the importance of security. That is why at Grapherex, we have modified and adapted the following algorithms:
- https://signal.org/docs/specifications/xeddsa/
- https://signal.org/docs/specifications/x3dh/
- https://signal.org/docs/specifications/doubleratchet/
This enables both parties to work with the wallet securely and privately while observing the requirements of the regulator. Only the user has access to his funds and can dispose of them. The application’s policy allows the platform to block the wallet in the event of fraud. By doing so, Grapherex restricts access to the private crypto-container storing the private key.
The Grapherex wallet offers a reliable algorithm for information exchange and integration of a crypto container encrypted with a key stored by the user. The application uses open-source technology for wallet protection with E2E encryption. The data encryption process occurs on one device, and only the receiver’s device can decrypt the information. This policy is much safer for the user and the service itself.
Therefore, the Grapherex wallet is an ideal choice for crypto traders and professionals involved in international projects using cryptocurrency as a payment method.
Stay tuned for our future updates — we always have something exciting in the works. And enjoy the Grapherex app!
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