diff --git a/CHANGELOG.md b/CHANGELOG.md
index 1a5373bc..69dd8a81 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -2,6 +2,14 @@
 
 ## HEAD
 
+- `cmd/bnscli`: a new command `mnemonic` was added for generating a random
+  mnemonic as described in BIP-39.
+
+Breaking changes
+
+- `cmd/bnscli`: `keygen` command was updated and requires a mnemonic to
+  generate a key.
+
 
 ## 0.20.0
 
diff --git a/cmd/bnscli/clitests/keyaddr.test b/cmd/bnscli/clitests/keyaddr.test
index 1618515f..87ec43e7 100644
--- a/cmd/bnscli/clitests/keyaddr.test
+++ b/cmd/bnscli/clitests/keyaddr.test
@@ -8,6 +8,8 @@ set -e
 keyfile=`mktemp`
 echo 00wZcK6QrPNAXy2Z3KyhbQx9s3n0vq/P32Z7nWnONQ0n9ftEBQnfp57Ig6BRC8mpYUw9RBiIgfDF5AKJi0vzyQ== | base64 --decode > $keyfile
 
+# The output of this command can be verified using iov-core
+# https://iov-one.github.io/token-finder/#E28AE9A6EB94FC88B73EB7CBD6B87BF93EB9BEF0
 bnscli keyaddr -key $keyfile
 
 rm $keyfile
diff --git a/cmd/bnscli/clitests/keyaddr.test.gold b/cmd/bnscli/clitests/keyaddr.test.gold
index f304761c..ba4b0d0a 100644
--- a/cmd/bnscli/clitests/keyaddr.test.gold
+++ b/cmd/bnscli/clitests/keyaddr.test.gold
@@ -1 +1,2 @@
-E28AE9A6EB94FC88B73EB7CBD6B87BF93EB9BEF0
+bech32	iov1u29wnfhtjn7g3de7kl9adwrmlyltn0hsudlacf
+hex	E28AE9A6EB94FC88B73EB7CBD6B87BF93EB9BEF0
diff --git a/cmd/bnscli/clitests/keygen.test b/cmd/bnscli/clitests/keygen.test
index 6ae97efa..3998b57d 100644
--- a/cmd/bnscli/clitests/keygen.test
+++ b/cmd/bnscli/clitests/keygen.test
@@ -2,12 +2,16 @@
 
 set -e
 
+mnemonic=`mktemp`
+echo -n 'neutral abandon month park disease forum engage dutch coconut base morning icon wide stock coast fork girl fish despair kiss dilemma pass slide major' > $mnemonic
+
 # Use a custom key path just in case the host is using original one.
 tempdir=`mktemp -d`
 keypath=$tempdir/key.priv
 export BNSCLI_PRIV_KEY=$keypath
 
-bnscli keygen
+bnscli keygen < $mnemonic
+rm $mnemonic
 
 # Key generation in non deterministic (cryptography 101) so we cannot compare
 # its value. We can only ensure that enough bytes was generated.
diff --git a/cmd/bnscli/cmd_key.go b/cmd/bnscli/cmd_key.go
index e3db89e7..108cf252 100644
--- a/cmd/bnscli/cmd_key.go
+++ b/cmd/bnscli/cmd_key.go
@@ -1,13 +1,20 @@
 package main
 
 import (
+	"bytes"
+	"crypto/sha256"
+	"errors"
 	"flag"
 	"fmt"
 	"io"
 	"io/ioutil"
 	"os"
+	"strings"
 
 	"github.com/iov-one/weave/crypto"
+	"github.com/iov-one/weave/crypto/bech32"
+	"github.com/stellar/go/exp/crypto/derivation"
+	"github.com/tyler-smith/go-bip39"
 	"golang.org/x/crypto/ed25519"
 )
 
@@ -15,7 +22,7 @@ func cmdKeygen(input io.Reader, output io.Writer, args []string) error {
 	fl := flag.NewFlagSet("", flag.ExitOnError)
 	fl.Usage = func() {
 		fmt.Fprint(flag.CommandLine.Output(), `
-Generate a new private key.
+Read mnemonic and generate a new private key.
 
 When successful a new file with binary content containing private key is
 created. This command fails if the private key file already exists.
@@ -25,6 +32,7 @@ created. This command fails if the private key file already exists.
 	var (
 		keyPathFl = fl.String("key", env("BNSCLI_PRIV_KEY", os.Getenv("HOME")+"/.bnsd.priv.key"),
 			"Path to the private key file that transaction should be signed with. You can use BNSCLI_PRIV_KEY environment variable to set it.")
+		pathFl = fl.String("path", "m/44'/234'/0'", "Derivation path as described in BIP-44.")
 	)
 	fl.Parse(args)
 
@@ -35,9 +43,14 @@ created. This command fails if the private key file already exists.
 		return fmt.Errorf("private key file %q already exists, delete this file and try again", *keyPathFl)
 	}
 
-	_, priv, err := ed25519.GenerateKey(nil)
+	mnemonic, err := readInput(input)
 	if err != nil {
-		return fmt.Errorf("cannot generate ed25519 key: %s", err)
+		return fmt.Errorf("cannot read mnemonic: %s", err)
+	}
+
+	priv, err := keygen(string(mnemonic), *pathFl)
+	if err != nil {
+		return fmt.Errorf("cannot generate key: %s", err)
 	}
 
 	fd, err := os.OpenFile(*keyPathFl, os.O_CREATE|os.O_WRONLY, 0400)
@@ -55,6 +68,53 @@ created. This command fails if the private key file already exists.
 	return nil
 }
 
+// keygen returns a private key generated using given mnemonic and derivation
+// path.
+func keygen(mnemonic, derivationPath string) (ed25519.PrivateKey, error) {
+	if err := validateMnemonic(string(mnemonic)); err != nil {
+		return nil, fmt.Errorf("invalid mnemonic: %s", err)
+	}
+
+	// We do not allow for passphrase.
+	seed := bip39.NewSeed(string(mnemonic), "")
+
+	key, err := derivation.DeriveForPath(derivationPath, seed)
+	if err != nil {
+		return nil, fmt.Errorf("cannot deriviate master key from seed: %s", err)
+	}
+
+	_, priv, err := ed25519.GenerateKey(bytes.NewReader(key.Key))
+	if err != nil {
+		return nil, fmt.Errorf("cannot generate ed25519 private key: %s", err)
+	}
+	return priv, nil
+}
+
+// isMnemonicValid returns true if given mnemonic string is valid. Whitespaces
+// are relevant.
+//
+// Use this instead of bip39.IsMnemonicValid because this function ensures the
+// checksum consistency. bip39.IsMnemonicValid does not test the checksum. It
+// also ignores whitespaces.
+//
+// This function ensures that the mnemonic is a single space separated list of
+// words as this is important during seed creation.
+func validateMnemonic(mnemonic string) error {
+	// A lazy way to check that words are exactly single space separated.
+	expected := strings.Join(strings.Fields(mnemonic), " ")
+	if mnemonic != expected {
+		return errors.New("whitespace violation")
+	}
+
+	// Entropy generation does base validation of checking if words are
+	// valid and in the right amount. It also tests the checksum.
+	if _, err := bip39.EntropyFromMnemonic(mnemonic); err != nil {
+		return fmt.Errorf("entropy: %s", err)
+	}
+
+	return nil
+}
+
 func cmdKeyaddr(input io.Reader, output io.Writer, args []string) error {
 	fl := flag.NewFlagSet("", flag.ExitOnError)
 	fl.Usage = func() {
@@ -66,6 +126,7 @@ Print out a hex-address associated with your private key.
 	var (
 		keyPathFl = fl.String("key", env("BNSCLI_PRIV_KEY", os.Getenv("HOME")+"/.bnsd.priv.key"),
 			"Path to the private key file that transaction should be signed with. You can use BNSCLI_PRIV_KEY environment variable to set it.")
+		bechPrefixFl = fl.String("bp", "iov", "Bech32 prefix.")
 	)
 	fl.Parse(args)
 
@@ -83,6 +144,51 @@ Print out a hex-address associated with your private key.
 			Ed25519: raw,
 		},
 	}
-	_, err = fmt.Fprintln(output, key.PublicKey().Address())
+
+	bech, err := toBech32(*bechPrefixFl, key.PublicKey().GetEd25519())
+	if err != nil {
+		return fmt.Errorf("cannot generate bech32 address format: %s", err)
+	}
+
+	fmt.Fprintf(output, "bech32\t%s\n", bech)
+	fmt.Fprintf(output, "hex\t%s\n", key.PublicKey().Address())
+	return nil
+}
+
+// toBech32 computes the bech32 address representation as described in
+// https://github.com/iov-one/iov-core/blob/8846fed17443766a9ad9c908c3d7fc9d205e02ef/docs/address-derivation-v1.md#deriving-addresses-from-keypairs
+func toBech32(prefix string, pubkey []byte) ([]byte, error) {
+	data := append([]byte("sigs/ed25519/"), pubkey...)
+	hash := sha256.Sum256(data)
+	bech, err := bech32.Encode(prefix, hash[:20])
+	if err != nil {
+		return nil, fmt.Errorf("cannot compute bech32: %s", err)
+	}
+	return bech, nil
+}
+
+func cmdMnemonic(input io.Reader, output io.Writer, args []string) error {
+	fl := flag.NewFlagSet("", flag.ExitOnError)
+	fl.Usage = func() {
+		fmt.Fprint(flag.CommandLine.Output(), `
+Generate and print out a mnemonic. Keep the result in safe place!
+`)
+		fl.PrintDefaults()
+	}
+	var (
+		bitSizeFl = fl.Uint("size", 256, "Bit size of the entropy. Must be between 128 and 256.")
+	)
+	fl.Parse(args)
+
+	entropy, err := bip39.NewEntropy(int(*bitSizeFl))
+	if err != nil {
+		return fmt.Errorf("cannot create entropy instance: %s", err)
+	}
+	mnemonic, err := bip39.NewMnemonic(entropy)
+	if err != nil {
+		return fmt.Errorf("cannot create mnemonic instance: %s", err)
+	}
+
+	_, err = fmt.Fprintln(output, mnemonic)
 	return err
 }
diff --git a/cmd/bnscli/cmd_key_test.go b/cmd/bnscli/cmd_key_test.go
new file mode 100644
index 00000000..3b7d3610
--- /dev/null
+++ b/cmd/bnscli/cmd_key_test.go
@@ -0,0 +1,105 @@
+package main
+
+import (
+	"testing"
+
+	"golang.org/x/crypto/ed25519"
+)
+
+func TestKeygen(t *testing.T) {
+	const mnemonic = `shy else mystery outer define there front bracket dawn honey excuse virus lazy book kiss cannon oven law coconut hedgehog veteran narrow great cage`
+
+	// Result of this test can be verified using iov-core implementation
+	// available at https://iov-one.github.io/token-finder/
+	cases := map[string]string{
+		"m/44'/234'/0'": "tiov1c3n70dph9m2jepszfmmh84pu75zuga3zrsd7jw",
+		"m/44'/234'/1'": "tiov10lzv8v2lds7jvmkdt6t6khmhydr920r2yux8p9",
+		"m/44'/234'/2'": "tiov18gwds8rx8cajav3m4lr5j98vlly9n8ms930z2l",
+		"m/44'/234'/3'": "tiov1casuhjhjcqlxhlcfpqak5uccpqyajzp0nj3639",
+		"m/44'/234'/4'": "tiov16rjld9tw88yrcc954cvvtnern576daunnn8jmn",
+	}
+
+	for path, bech := range cases {
+		t.Run(path, func(t *testing.T) {
+			priv, err := keygen(mnemonic, path)
+			if err != nil {
+				t.Fatalf("cannot generate key: %s", err)
+			}
+			b, err := toBech32("tiov", priv.Public().(ed25519.PublicKey))
+			if err != nil {
+				t.Fatalf("cannot serialize to bech32: %s", err)
+			}
+			if got := string(b); got != bech {
+				t.Logf("want: %s", bech)
+				t.Logf(" got: %s", got)
+				t.Fatal("unexpected bech address")
+			}
+		})
+	}
+}
+
+func TestMnemonic(t *testing.T) {
+	cases := map[string]struct {
+		mnemonic string
+		wantErr  bool
+	}{
+
+		"valid mnemonic 12 words": {
+			mnemonic: "super bulk plunge better rookie donor reward obscure rescue type trade pelican",
+			wantErr:  false,
+		},
+		"valid mnemonic 15 words": {
+			mnemonic: "say debris entry orange grief deer train until flock scrub volume artist skill obscure immense",
+			wantErr:  false,
+		},
+		"valid mnemonic 18 words": {
+			mnemonic: "fetch height snow poverty space follow seven festival wasp pet asset tattoo cement twist exile trend bench eternal",
+			wantErr:  false,
+		},
+		"valid mnemonic 21 words": {
+			mnemonic: "increase shine pumpkin curtain trash cabbage juice canal ugly naive name insane indoor assault snap taxi casual unhappy buddy defense artefact",
+			wantErr:  false,
+		},
+		"valid mnemonic 24 words": {
+			mnemonic: "usage mountain noodle inspire distance lyrics caution wait mansion never announce biology squirrel guess key gain belt same matrix chase mom beyond model toy",
+			wantErr:  false,
+		},
+		"additional whitespace around mnemonnic is not allowed (beginning)": {
+			mnemonic: " super bulk plunge better rookie donor reward obscure rescue type trade pelican",
+			wantErr:  true,
+		},
+		"additional whitespace around mnemonnic is not allowed (end)": {
+			mnemonic: "super bulk plunge better rookie donor reward obscure rescue type trade pelican ",
+			wantErr:  true,
+		},
+		"additional whitespace around mnemonnic is not allowed (middle)": {
+			mnemonic: "super bulk plunge better rookie    donor reward obscure rescue type trade pelican",
+			wantErr:  true,
+		},
+		"mnemonnic cannot be tab separated": {
+			mnemonic: "super\tbulk plunge better rookie donor reward obscure rescue type trade pelican",
+			wantErr:  true,
+		},
+		"mnenomic that is valid in a language other than English (Italian)": {
+			mnemonic: "acrobata acuto adagio addebito addome adeguato aderire adipe adottare adulare affabile affetto affisso affranto aforisma",
+			wantErr:  true,
+		},
+		"mnenomic that is valid in a language other than English (Japanese)": {
+			mnemonic: " あつかう あっしゅく あつまり あつめる あてな あてはまる あひる あぶら あぶる あふれる あまい あまど ",
+			wantErr:  true,
+		},
+		"initially valid mnemonic that the last word was changed": {
+			mnemonic: "super bulk plunge better rookie donor reward obscure rescue type trade trade",
+			wantErr:  true,
+		},
+	}
+
+	for testName, tc := range cases {
+		t.Run(testName, func(t *testing.T) {
+			_, err := keygen(tc.mnemonic, "m/44'/234'/0'")
+			if hasErr := err != nil; hasErr != tc.wantErr {
+				t.Fatalf("returned erorr value: %+v", err)
+			}
+		})
+	}
+}
diff --git a/cmd/bnscli/common.go b/cmd/bnscli/common.go
index da6cd141..7d791d4c 100644
--- a/cmd/bnscli/common.go
+++ b/cmd/bnscli/common.go
@@ -7,6 +7,7 @@ import (
 	"errors"
 	"fmt"
 	"io"
+	"io/ioutil"
 	"os"
 	"strconv"
 	"strings"
@@ -182,3 +183,22 @@ func tendermintStore(nodeURL string) weave.ReadOnlyKVStore {
 	tm := rpcclient.NewHTTP(nodeURL, "/websocket")
 	return app.NewABCIStore(rpcQueryWrapper{tm})
 }
+
+// readInput returns all bytes waiting on given input. This function immediatly
+// returns errNoPipe error if the input is not piped to avoid forever waiting.
+func readInput(input io.Reader) ([]byte, error) {
+	// If the given reader is providing a stat information (ie os.Stdin)
+	// then check if the data is being piped. That should prevent us from
+	// waiting for a data on a reader that no one ever writes to.
+	if s, ok := input.(stater); ok {
+		if info, err := s.Stat(); err == nil {
+			isPipe := (info.Mode() & os.ModeCharDevice) == 0
+			if !isPipe {
+				return nil, errNoPipe
+			}
+		}
+	}
+	return ioutil.ReadAll(input)
+}
+
+var errNoPipe = errors.New("no data piped")
diff --git a/cmd/bnscli/main.go b/cmd/bnscli/main.go
index 6679e472..bc83b6aa 100644
--- a/cmd/bnscli/main.go
+++ b/cmd/bnscli/main.go
@@ -42,6 +42,7 @@ var commands = map[string]func(input io.Reader, output io.Writer, args []string)
 	"from-sequence":             cmdFromSequence,
 	"keyaddr":                   cmdKeyaddr,
 	"keygen":                    cmdKeygen,
+	"mnemonic":                  cmdMnemonic,
 	"multisig":                  cmdMultisig,
 	"query":                     cmdQuery,
 	"register-username":         cmdRegisterUsername,
diff --git a/go.mod b/go.mod
index 2d13bd93..96c610b8 100644
--- a/go.mod
+++ b/go.mod
@@ -17,12 +17,13 @@ require (
 	github.com/prometheus/client_golang v0.9.3 // indirect
 	github.com/rcrowley/go-metrics v0.0.0-20181016184325-3113b8401b8a // indirect
 	github.com/rs/cors v1.6.0 // indirect
-	github.com/stellar/go v0.0.0-20190524153138-e5e03dc34e2d
+	github.com/stellar/go v0.0.0-20190723221356-14eed5a46caf
 	github.com/stellar/go-xdr v0.0.0-20180917104419-0bc96f33a18e // indirect
 	github.com/syndtr/goleveldb v1.0.0 // indirect
 	github.com/tendermint/go-amino v0.15.0
 	github.com/tendermint/iavl v0.12.2
 	github.com/tendermint/tendermint v0.31.5
+	github.com/tyler-smith/go-bip39 v1.0.1-0.20181017060643-dbb3b84ba2ef
 	golang.org/x/crypto v0.0.0-20190513172903-22d7a77e9e5f
 	google.golang.org/grpc v1.21.0 // indirect
 )
diff --git a/go.sum b/go.sum
index dbe19459..d2979bac 100644
--- a/go.sum
+++ b/go.sum
@@ -108,8 +108,8 @@ github.com/rs/cors v1.6.0 h1:G9tHG9lebljV9mfp9SNPDL36nCDxmo3zTlAf1YgvzmI=
 github.com/rs/cors v1.6.0/go.mod h1:gFx+x8UowdsKA9AchylcLynDq+nNFfI8FkUZdN/jGCU=
 github.com/sirupsen/logrus v1.2.0/go.mod h1:LxeOpSwHxABJmUn/MG1IvRgCAasNZTLOkJPxbbu5VWo=
 github.com/spaolacci/murmur3 v0.0.0-20180118202830-f09979ecbc72/go.mod h1:JwIasOWyU6f++ZhiEuf87xNszmSA2myDM2Kzu9HwQUA=
-github.com/stellar/go v0.0.0-20190524153138-e5e03dc34e2d h1:qlw1pPjIH7Uo9t1BeP+/pHvqAxB0Yq22zLpWzY1Uu4I=
-github.com/stellar/go v0.0.0-20190524153138-e5e03dc34e2d/go.mod h1:Kkro8X6IWn/5XtSicGd6N2LZKMKUCWS5wS5Ctjh6+Vw=
+github.com/stellar/go v0.0.0-20190723221356-14eed5a46caf h1:gLIFkwCtIquj9iFCPy595EFSmgJbQIZMLAG6gFHcNrI=
+github.com/stellar/go v0.0.0-20190723221356-14eed5a46caf/go.mod h1:Kkro8X6IWn/5XtSicGd6N2LZKMKUCWS5wS5Ctjh6+Vw=
 github.com/stellar/go-xdr v0.0.0-20180917104419-0bc96f33a18e h1:n/hfey8pO+RYMoGXyvyzuw5pdO8IFDoyAL/g5OiCesY=
 github.com/stellar/go-xdr v0.0.0-20180917104419-0bc96f33a18e/go.mod h1:gpOLVzy6TVYTQ3LvHSN9RJC700FkhFCpSE82u37aNRM=
 github.com/stretchr/objx v0.1.0/go.mod h1:HFkY916IF+rwdDfMAkV7OtwuqBVzrE8GR6GFx+wExME=
@@ -125,6 +125,8 @@ github.com/tendermint/iavl v0.12.2 h1:Ls5p5VINCM1HRT9g5Vvs2zmDOCU/CCIvIHzd/pZ8P0
 github.com/tendermint/iavl v0.12.2/go.mod h1:EoKMMv++tDOL5qKKVnoIqtVPshRrEPeJ0WsgDOLAauM=
 github.com/tendermint/tendermint v0.31.5 h1:vTet8tCq3B9/J9Yo11dNZ8pOB7NtSy++bVSfkP4KzR4=
 github.com/tendermint/tendermint v0.31.5/go.mod h1:ymcPyWblXCplCPQjbOYbrF1fWnpslATMVqiGgWbZrlc=
+github.com/tyler-smith/go-bip39 v1.0.1-0.20181017060643-dbb3b84ba2ef h1:wHSqTBrZW24CsNJDfeh9Ex6Pm0Rcpc7qrgKBiL44vF4=
+github.com/tyler-smith/go-bip39 v1.0.1-0.20181017060643-dbb3b84ba2ef/go.mod h1:sJ5fKU0s6JVwZjjcUEX2zFOnvq0ASQ2K9Zr6cf67kNs=
 golang.org/x/crypto v0.0.0-20170930174604-9419663f5a44/go.mod h1:6SG95UA2DQfeDnfUPMdvaQW0Q7yPrPDi9nlGo2tz2b4=
 golang.org/x/crypto v0.0.0-20180904163835-0709b304e793/go.mod h1:6SG95UA2DQfeDnfUPMdvaQW0Q7yPrPDi9nlGo2tz2b4=
 golang.org/x/crypto v0.0.0-20190308221718-c2843e01d9a2/go.mod h1:djNgcEr1/C05ACkg1iLfiJU5Ep61QUkGW8qpdssI0+w=