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An HD Wallet is a master key that can be used to derive several Bitcoin addresses. CoinOS will use the master key that's generated here to derive a new address for every payment to your account so that people can't link separate payments together and invade your customers' privacy.
The master pubkey is what's used to derive the addresses and the master private key is what's needed to authorize payments out from the wallet. CoinOS will get you to encrypt the private key with a strong passphrase before it's stored on our server so that no one but you can access your funds. The password could be a different password from the one you use to login to your account, or it could be the same, but what's important is that you remember it. You'll need to enter the password whenever you make a transaction out of the wallet.
IMPORTANT: We cannot recover or reset your password. If you lose it or forget it, any funds sent to your account will be lost forever, so make it memorable or write it down.