Bitcoin Transactions and Wallets Flashcards

What is the difference between 'hot' and 'cold' Bitcoin wallets?

Answer: Hot wallets are internet-connected and convenient for frequent use; cold wallets are offline and more secure for long-term storage

Hot wallets stay connected to the internet for quick transactions but face greater attack exposure, while cold wallets remain offline to minimize theft risk.

Which Bitcoin script opcode is used to implement absolute time locks at the script level?

Answer: OP_CHECKLOCKTIMEVERIFY (CLTV)

OP_CHECKLOCKTIMEVERIFY (BIP65) enforces an absolute time lock in a script, preventing spending until a specific block height or Unix timestamp is reached.

What is the purpose of a Bitcoin 'xpub' (extended public key)?

Answer: To allow a third party to derive all child public keys and monitor balances without being able to spend funds

An xpub lets anyone derive an unlimited number of public keys and addresses for an HD wallet branch, enabling balance auditing or payment address generation without spending access.

In Bitcoin, what is 'fee bumping' via Child-Pays-For-Parent (CPFP)?

Answer: Creating a child transaction that spends an unconfirmed parent's output with a high fee, incentivizing miners to confirm both transactions together

CPFP works because miners evaluate the combined fee rate of a parent-child pair, motivating them to mine the low-fee parent to claim the high-fee child's reward.

What information is revealed on the Bitcoin blockchain when a P2PKH output is spent?

Answer: The spender's full public key and a digital signature, which were previously hidden in the address hash

Spending a P2PKH output requires revealing the full public key (previously hashed into the address) alongside a valid signature in the scriptSig.

What is the maximum number of inputs and outputs a Bitcoin transaction can have?

Answer: There is no hard limit; the practical constraint is the block size/weight limit

Bitcoin's protocol does not impose a hard limit on input or output counts; transactions are bounded in practice by the 1 MB block size (4 million weight unit) limit.

A Taproot (P2TR) address begins with which prefix on the Bitcoin mainnet?

Answer: bc1p

Taproot addresses use bech32m encoding and begin with 'bc1p' on Bitcoin mainnet, distinguishing them from legacy (1...), P2SH (3...), and SegWit v0 (bc1q...) addresses.