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Key Derivation

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The process of computing a cryptographic key from source material — a password, a seed, or a parent key — using a deterministic algorithm. BIP-32 key derivation uses HMAC-SHA512 to derive child private and public keys from a parent extended key. Key derivation functions (KDFs) like PBKDF2 are also used to stretch a BIP-39 mnemonic into the 512-bit seed before HD derivation begins.