🔐 Non-Custodial Wallet Addresses

✅ Key Answers to Your Questions:

• Multiple addresses at once: YES! You can have many addresses active simultaneously. They all belong to the same wallet.
• Address reuse: Addresses CAN be reused, but it's not recommended for privacy reasons.
• When are new addresses created: It's not sequential per transaction. You can generate addresses anytime, even before using previous ones.
• All addresses remain valid: Old addresses continue to work forever and can receive funds at any time.

📏 Address Length & Format

• Bitcoin addresses DO have character limits - they're not unlimited length!
• Legacy (P2PKH): 26-35 characters, starts with "1"
• SegWit (P2SH): 34 characters, starts with "3"
• Native SegWit (Bech32): 42 characters, starts with "bc1q"
• Taproot (Bech32m): 62 characters, starts with "bc1p"
• Different formats have different fixed or limited lengths based on the address type and encoding scheme.

🔗 How Derivation Paths Point Back to the Master Seed

The magic of HD wallets: The derivation path doesn't "point back" in the sense of storing a reference. Instead, it's a mathematical one-way function that can be reproduced deterministically.

• Step 1: Master seed → Master private key (using HMAC-SHA512)
• Step 2: Master key + derivation path (m/44'/0'/0'/0/0) → Child private key
• Step 3: Child private key → Public key (using elliptic curve cryptography)
• Step 4: Public key → Bitcoin address (using hashing + encoding)

The key insight: Given the same seed and the same derivation path, you'll ALWAYS get the same address. The wallet doesn't need to store addresses - it can regenerate them on demand using: seed + path → address

Recovery: This is why you can recover your entire wallet with just the seed phrase. The wallet software tries standard derivation paths (m/44'/0'/0'/0/0, m/44'/0'/0'/0/1, etc.) and regenerates all your addresses.

🗺️ Understanding the Derivation Path: m/44'/0'/0'/0/[index]

This isn't a "seed path" - it's a derivation path that tells the wallet how to derive child keys from the master seed. Each part has a specific meaning:

• The apostrophe ('): Means "hardened" derivation - more secure, can't derive public keys without private key
• Coin type examples: 0' = Bitcoin, 60' = Ethereum, 2' = Litecoin
• Account: Lets you have separate "accounts" within one wallet (like bank sub-accounts)
• Chain: 0 = external (receiving addresses), 1 = internal (change addresses)
• Index: The part that changes to generate different addresses (0, 1, 2, 3...)

So when you generate multiple addresses, only the last number (index) changes. The path m/44'/0'/0'/0/0 gives you address #1, m/44'/0'/0'/0/1 gives you address #2, and so on. Same seed + different index = different address!

💰 How Your Wallet Shows Your Total Balance

Yes! Your wallet scans the blockchain and aggregates everything. Here's how it works:

• Your wallet is essentially a scanner + calculator: It doesn't actually "hold" your coins. It derives addresses from your seed, scans the blockchain for their transactions, and adds up the balance.
• The blockchain is the source of truth: Your coins aren't "in" your wallet - they're on the blockchain at various addresses. Your wallet just has the keys to control them.
• Recovery process: When you restore a wallet from seed, it does this entire scanning process to rediscover all your addresses and balances.
• Gap limit: The standard is 20 unused addresses. If you somehow used address #0, then skipped to #50, a restored wallet might miss #50 because it stopped scanning at #20.

🔍 Fun fact: This is why wallet restoration can take a few minutes - your wallet software is deriving hundreds of addresses and checking each one against the blockchain to find your transactions!