Derivation Path is an ordered sequence of normal and hardened indices used to derive a key under BIP 32. It is not a seed, private key or address; the same notation applied to a different starting key leads to different keys.
In m/0/7, m denotes the master private node and each slash adds a derivation: first child 0, then its child 7. Derivation uses an extended key including the chain code. The numbers are neither amounts nor transaction numbers; the path itself supplies no signing material. [BIP 32 — Hierarchical Deterministic Wallets]
BIP 32 divides 32-bit indices into normal 0 through 2^31−1 and hardened 2^31 through 2^32−1. Both 0' and 0h denote hardened index 2^31, not normal 0; BIP 380 accepts apostrophe and h. A normal public child can be obtained from an xpub, but a hardened child cannot be derived from an xpub alone. [BIP 32 — Hierarchical Deterministic Wallets] [BIP 380 — Output Script Descriptors]
The example m/84'/0'/0'/0/7 identifies the BIP 84 convention, Bitcoin mainnet, account 0, external receiving branch 0 and index 7, the eighth address position. The first three levels are hardened and the last two normal. In the BIP 44 convention, branch 1 is used for one's own change; indices start at zero. [BIP 44 — Multi-Account Hierarchy] [BIP 84 — Native P2WPKH derivation]
BIP 43 reserves the first hardened level for purpose. Convention 44' relates to P2PKH, 49' to P2SH-P2WPKH, 84' to P2WPKH and 86' to single-key P2TR. The number alone does not enforce a consensus script; software must construct the corresponding output. Not all wallets use these conventions. [BIP 43 — Purpose Field] [BIP 44 — Multi-Account Hierarchy] [BIP 49 — P2WPKH nested in P2SH] [BIP 84 — Native P2WPKH derivation] [BIP 86 — Single Key P2TR Outputs]
If an xpub is already exported at m/84'/0'/0', the relative suffix /0/7 is enough for this descendant. Appending the entire root path again to an account xpub performs a different derivation, and its hardened steps cannot work from that xpub anyway. Serialized depth and parent fingerprint do not contain the full original path history. [BIP 32 — Hierarchical Deterministic Wallets] [BIP 380 — Output Script Descriptors]
BIP 380 permits a fingerprint/path origin in square brackets before a key and a derivation suffix after it. The origin describes steps already performed; the suffix is still to be derived. A descriptor additionally specifies the script and may contain a range through *. The fingerprint is four bytes and can collide; it is neither identity proof nor a substitute for the key. [BIP 380 — Output Script Descriptors] [BIP 32 — Hierarchical Deterministic Wallets] [Bitcoin Core 29.0 — deriveaddresses RPC]
BIP 32 warns that a parent xpub together with a leaked normal private descendant can reveal the parent extended private key. A hardened boundary separates this particular process, but does not protect the already leaked key itself. A shared xpub also exposes its public branch and can harm privacy even though it cannot sign on its own. [BIP 32 — Hierarchical Deterministic Wallets]
Recovery checks the correct seed and any passphrase, network, account, branch, script and scan range including Gap Limit. Valid syntax can point into a different empty branch; a zero balance therefore does not prove the keys are wrong. Correctness is checked against a known receiving address and history, not merely whether software accepted the path. [BIP 39 — From mnemonic to seed] [BIP 44 — Multi-Account Hierarchy] [BIP 380 — Output Script Descriptors]
For the clearest picture, read this entry together with HD Wallet, Extended Public Key (xpub), Gap Limit, Output Descriptor, BIP 39. The reverse links also lead from HD Wallet, Watch-only Wallet, Change output, Extended Public Key (xpub).