A Two-Party Hierarchical Deterministic Wallets in Practice

The applications of Hierarchical Deterministic Wallet are rapidly growing in various areas such as cryptocurrency exchanges and hardware wallets. Improving privacy and security is more important than ever. In this study, we proposed a protocol that fully support a two-party computation of BIP32. Our protocol, similar to the distributed key generation, can generate each party’s secret share, the common chain-code, and the public key without revealing a seed and any descendant private keys. We also provided a simulation-based proof of our protocol assuming a rushing, static, and malicious adversary in the hybrid model. Our master key generation protocol produces up to total of two bit leakages from a honest party given the feature that the seeds will be re-selected after each execution. The proposed hardened child key derivation protocol leads up to a one bit leakage in the worst situation of simulation from a honest party and will be accumulated with each execution. Fortunately, in reality, this issue can be largely mitigated by adding some validation criteria of boolean circuits and masking the input shares before each execution. We then implemented the proposed protocol and ran in a single thread on a laptop which turned out with practically acceptable execution time. Lastly, the outputs of our protocol can be easily integrated with many threshold sign protocols