CBP Bitcoin Transactions and Wallets 3

Question 1

What is the primary advantage of a hardware wallet over a software wallet?

Accepted Answer

Private keys never leave the device, protecting them from internet-connected malware

Answer

Hardware wallets store private keys in a secure element and sign transactions internally, so keys are never exposed to potentially compromised computers.

Question 2

In the Bitcoin UTXO model, what is 'coin selection'?

Accepted Answer

The algorithm a wallet uses to choose which UTXOs to combine as inputs for a new transaction

Answer

Coin selection algorithms determine which UTXOs to use as inputs to minimize fees, avoid change, or improve privacy.

Question 3

What is a 'watch-only' wallet?

Accepted Answer

A wallet that has the public keys/addresses to monitor balances but cannot sign transactions

Answer

Watch-only wallets contain public keys or addresses to track balances and history without holding the private keys needed to spend.

Question 4

What does it mean for a Bitcoin transaction to be 'in the mempool'?

Accepted Answer

The transaction has been broadcast to the network but not yet included in a block

Answer

The mempool (memory pool) is each node's local holding area for valid but unconfirmed transactions awaiting block inclusion.

Question 5

Which of the following best describes a P2WPKH (Pay-to-Witness-Public-Key-Hash) address?

Accepted Answer

A native SegWit address starting with 'bc1q' that stores the hash of a public key in the witness field

Answer

P2WPKH is a native SegWit (bech32) address type beginning with 'bc1q' that places signature data in the segregated witness field.

(CBP) Certified Bitcoin Professional Practice Test

(CBP) Certified Bitcoin Professional Practice Test

CBP Bitcoin Transactions and Wallets 3