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Figure 4-8. Type-0 Non-Deterministic (Random) Wallet: A Collection of Randomly Generated Keys Deterministic (Seeded) Wallets Deterministic, or “seeded” wallets are wallets that contain private keys which are all derived from a common seed, through the use of a one-way hash function. The seed is a randomly generated number which is combined with other data, such as an index number or “chain code” (see “Hierarchical Deterministic Wallets (BIP0032/BIP0044)” on page 88) to derive the private keys. In a deterministic wallet, the seed is sufficient to recover all the derived keys and therefore a single backup at creation time is sufficient. The seed is also sufficient for a wallet export or import, allowing for easy migration of all the user’s keys between different wallet implementations. Mnemonic Code Words Mnemonic codes are English word sequences that represent (encode) a random number used as a seed to derive a deterministic wallet. The sequence of words is sufficient to re- create the seed and from there re-create the wallet and all the derived keys. A wallet application that implements deterministic wallets with mnemonic code will show the user a sequence of 12-24 words when first creating a wallet. That sequence of words is the wallet backup and can be used to recover and re-create all the keys in the same or 86 | Chapter 4: Keys, Addresses, WalletsPDF Image | Mastering Bitcoin
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