Wallets Flashcards
JBOK
JUST A BUNCH OF KEYS. The traditional way to keep track of keys was through what are known as JBOK wallets, where JBOK is an acronym standing for “Just a Bunch of Keys.” The idea behind JBOK wallets was that after making every transaction, you would make a
new backup of the new key pair you generate. JBOK wallets aren’t too convenient because you have to store each and every key pair.
Consider if you’re an exchange, and you have thousands of users trading constantly.
HD Wallet
HD Wallet = Hierarchical deterministic Wallet. So instead of having just a bunch of keys, let’s try something a bit more clever. What if we could instead come up with a way of deriving keys from a original seed value?
That’s the idea behind HD Wallets, or Hierarchical Deterministic wallets.
So we start off with a randomly generated seed value.
Instead of having to back up every single key from now on, we could just deterministically generate a new key pair, so long as we know our original seed.
We can think of this seed as a master key.
We first generate our master key, and for each subsequent key we want to generate, we can just just take the hash of the master key with some counter or index number, and
then we’ll arrive at our derived child key.
