What Is the Concept of “Key Derivation” in Cryptocurrency?

Key derivation is the process of generating a set of dependent keys from a single master key or seed. This is central to Hierarchical Deterministic (HD) wallets.

It allows for the creation of numerous public and private keys in a structured, predictable manner. The primary benefit is that only the initial seed needs to be backed up, and all other keys can be regenerated from it.