What is a derivation path in crypto?

A derivation path in crypto is the set of directions a wallet uses to turn one seed phrase into many private keys and addresses. It is written as a string of numbers such as m/44'/60'/0'/0/0. Two wallets restored from the same seed phrase show the same accounts only if they follow the same path. Why a restore can come up empty is introduced in can you use your seed phrase in another wallet. This guide explains how to read the path itself.

What does a BIP44 derivation path mean?

BIP44 is the Bitcoin improvement proposal that set the common format: m / purpose' / coin_type' / account' / change / address_index.

• m is the master key made from your seed.
• Purpose says which standard is in use, such as 44.
• Coin type gives each cryptocurrency its own branch. The numbers come from a registry called SLIP-0044, kept by SatoshiLabs. Bitcoin is 0, Ethereum is 60, XRP is 144, Tron is 195 and Solana is 501.
• Account separates funds into numbered accounts, starting at 0.
• Change is 0 for receiving addresses and 1 for change addresses that a wallet sends leftover coins to.
• Address index counts addresses from 0.

An apostrophe marks hardened derivation, a stricter method from the BIP32 standard. BIP44 uses it for the purpose, coin and account levels, while the last two levels use normal derivation. BIP44 also sets a gap limit of 20, meaning a wallet stops scanning after 20 unused addresses in a row.

What is the derivation path for Bitcoin?

Bitcoin uses different purpose numbers for its address types:

• 44 for legacy addresses, for example m/44'/0'/0'/0/0.
• 49 for SegWit addresses nested inside a script address (BIP49).
• 84 for native SegWit addresses that start with bc1q, for example m/84'/0'/0'/0/0 (BIP84).
• 86 for Taproot addresses that start with bc1p, for example m/86'/0'/0'/0/0 (BIP86).

Ledger notes that account-based chains such as Ethereum and Solana usually use one address per account, so the last two levels are typically 0/0.

What is the derivation path on Ledger?

Ledger Wallet, formerly Ledger Live, shows each account's current path under Edit account, then Advanced. For Ethereum, MetaMask lets Ledger users choose between three path options when connecting: Legacy (used by MyEtherWallet and MyCrypto), Ledger Live, and BIP44. The right choice is whichever one the accounts were first created with. MetaMask itself supports only the default Ethereum path m/44'/60'/0'/0 when importing a seed phrase, and its Trezor connection supports only BIP44.

Wrong derivation path, are funds missing?

Usually not. A wallet that uses a different path generates different addresses, so it shows zero balances even though the coins never moved. The fix is to restore the phrase in software that lets you pick or scan other paths, or connect the hardware wallet with the matching option. Looking up the old address in a blockchain explorer shows the funds are still there. Never type a seed phrase into a website or a "recovery tool" offered by a stranger, since that hands over the wallet.