The BIP44 Multi-Account Hierarchy

BIP44 is the gold standard for how Bitcoin wallets organize their internal tree structure. It defines a rigid 5-level path that ensures you can manage multiple accounts and multiple coins from a single seed.

1. The 5 Levels of BIP44

Every standard Bitcoin path follows this format: m / purpose' / coin_type' / account' / change / address_index

Level 1: Purpose (44')

This constant is set to 44'. it tells the software "I am following the BIP44 organization rule."

Level 2: Coin Type (0')

Each cryptocurrency has its own unique index.

• Bitcoin Mainnet: 0'

• Bitcoin Testnet: 1'

• Litecoin: 2'

• Ethereum: 60' This prevents a signature meant for a Bitcoin address from being accidentally valid for a different coin.

Level 3: Account (0')

This allows you to separate your funds into "Folders."

• 0': Personal Account

• 1': Business Account

• 2': Savings Account

Level 4: Change (0 or 1)

This level is not hardened.

• 0: External addresses (the ones you give to other people to receive money).

• 1: Internal addresses (used by the wallet to receive "Change" from your own transactions).

Level 5: Address Index

This is a sequential number (0, 1, 2, 3...) that identifies the specific address. Your first address is index 0.

2. Why the apostrophes?

The first three levels (purpose, coin_type, account) are Hardened.

• This means that even if someone sees your account xpub, they cannot "Move Up" the tree to find your other accounts or your master seed.

• The change and address_index levels are Normal. This allows the wallet to derive new receiving addresses using only the public xpub.

Level	Path Value	Description
1	44'	Follow BIP44 Standard
2	0'	Main Bitcoin Network
3	0'	Primary Account
4	0	Receiving Address
5	0	First Address

In the next section, we will compare the Purpose Codes (44, 49, 84, 86).