How Does a Hierarchical Deterministic (HD) Wallet Manage Multiple ECDSA Key Pairs?

An HD wallet uses a single master seed (a long random number) to deterministically generate a virtually infinite tree of private and public key pairs. This is based on the BIP32 standard.

All keys are derived in a predictable, reproducible hierarchy. This allows users to back up their entire wallet with just the master seed phrase, while still using a new address (and key pair) for every transaction to enhance privacy.