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What is a derivation path?
A derivation path is the route a wallet follows to generate a particular key from a seed phrase, written like m/44'/0'/0'/0/0. Each number picks a branch, such as the coin type, the account and the address number.
What it means for you
Two wallet apps can use different paths, so restoring the same seed phrase in a new app can show an empty balance even though the funds are still there. Note the path, or the wallet app and account type, alongside your backup.
A common mistake: “My restored wallet shows zero, so the coins are gone.”
In fact: Often the coins sit on a branch the new app is not checking: another derivation path, another account number, or an address beyond the 20-address gap. The coins stay on the chain; the right path or account type shows them.
How it works
BIP-32 turns a seed into a tree of keys: each child is computed from its parent key, a 32-byte chain code and an index number. BIP-44 fixes five levels, m / purpose' / coin_type' / account' / change / address_index, where an apostrophe marks hardened derivation, which uses the private key so a leaked child key cannot expose its parent. Coin type 0 is bitcoin; change 0 is receiving addresses and 1 is change. When restoring, wallets scan addresses in order and stop after 20 unused in a row, so funds past that gap or on another path stay hidden, not lost.
Sources: BIP-44: Multi-account hierarchy for deterministic wallets, BIP-32: Hierarchical deterministic wallets · checked 4 October 2026
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