Blockchain 101 Certification Tokens, Wallets & Digital Assets 2

Question 1

What is the primary difference between a hot wallet and a cold wallet?

Accepted Answer

Hot wallets are connected to the internet; cold wallets are kept offline

Answer

Hot wallets maintain an active internet connection making them convenient but more vulnerable, while cold wallets are stored offline providing greater security.

Question 2

In blockchain, what does a private key allow its holder to do?

Accepted Answer

Sign and authorize outgoing transactions from the associated address

Answer

A private key is a secret cryptographic key used to sign transactions, proving ownership of funds at the associated address without revealing the key itself.

Question 3

What is a Hierarchical Deterministic (HD) wallet?

Accepted Answer

A wallet that generates a tree of key pairs from a single master seed

Answer

HD wallets (BIP-32) derive an unlimited number of child key pairs from a single master seed, allowing easy backup and recovery of all addresses.

Question 4

What is a mnemonic seed phrase (recovery phrase) used for in cryptocurrency wallets?

Accepted Answer

Backing up and restoring access to a wallet's private keys using human-readable words

Answer

A mnemonic seed phrase is a human-readable representation of a wallet's master seed, allowing complete wallet recovery on any compatible software.

Question 5

Which type of hardware device is considered one of the most secure methods for storing cryptocurrency private keys?

Accepted Answer

A hardware security module (HSM) wallet like Ledger or Trezor

Answer

Hardware wallets store private keys in a secure chip that never exposes keys to connected computers, protecting against malware and online attacks.

Blockchain 101 Certification Practice Test

Blockchain 101 Certification Practice Test

Blockchain 101 Certification Tokens, Wallets & Digital Assets 2