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Wallets and Key Management Flashcards

7 cards from real CBP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Wallets and Key Management flashcards as text

  1. What is BIP-38 and what problem does it solve?

    Answer: A standard for passphrase-encrypting individual private keys for secure storage or transport

    BIP-38 defines a method to encrypt a private key with a passphrase, producing an encrypted WIF string that requires the passphrase to decrypt and use.

  2. What is the 'gap limit' in HD wallet address discovery?

    Answer: The number of consecutive unused addresses a wallet scans before stopping address discovery

    Wallets stop scanning for transactions after finding a configurable number (typically 20) of consecutive unused derived addresses, balancing thoroughness with performance.

  3. Shamir's Secret Sharing (SSS) applied to a Bitcoin seed allows for which capability?

    Answer: Splitting the seed into N shares where any M shares can reconstruct it, without any single share revealing the secret

    Shamir's Secret Sharing splits a secret into N shares with an M-of-N reconstruction threshold, so any M shares recover the seed but fewer than M reveal nothing about it.

  4. What distinguishes a custodial wallet from a non-custodial wallet?

    Answer: In custodial wallets a third party holds the private keys; in non-custodial wallets the user controls their own keys

    Custodial wallets delegate key control to a service provider, meaning users trust the provider's security; non-custodial wallets give users sole control of their private keys.

  5. What is the purpose of the checksum appended to a BIP-39 mnemonic phrase?

    Answer: To detect transcription errors when recording or entering the mnemonic

    The checksum consists of the first bits of the SHA-256 hash of the entropy, allowing wallets to verify that a mnemonic was entered correctly and catch typos.

  6. When using a hardware wallet with a passphrase, what is the consequence of forgetting the passphrase?

    Answer: Funds in the passphrase-protected wallet are permanently inaccessible even with the correct seed phrase

    The passphrase is not stored anywhere and deterministically modifies key derivation, so without it the correct child keys cannot be derived and funds are irrecoverably lost.

  7. Which attack vector does 'address verification on the hardware wallet screen' protect against?

    Answer: Man-in-the-middle attacks where malware substitutes a different recipient address on the host computer

    Malware on a host computer can replace a copied recipient address; verifying the address on the hardware wallet's trusted display ensures the correct address is being signed.