I'm confused by the wording in BIP0032:
One weakness that may not be immediately obvious, is that knowledge of a parent extended public key plus any non-hardened private key descending from it is equivalent to knowing the parent extended private key (and thus every private and public key descending from it). This means that extended public keys must be treated more carefully than regular public keys. It is also the reason for the existence of hardened keys, and why they are used for the account level in the tree. This way, a leak of account-specific (or below) private key never risks compromising the master or other accounts.
The default recommended wallet layout is
So if I leak the
m/0'/0 (which, in theory, my auditor has) and a private key in
m/0'/0/14, then wouldn't all keys in
m/0'/0/i be compromised? I understand that
m are safe but now you've lost an entire account when all that needed to be done was harden the index. What is the cause for this recommendation?