CBP Wallets and Key Management 2

Question 1

What is the purpose of a BIP-39 passphrase (sometimes called the '25th word')?

Accepted Answer

To add an additional layer of security that creates a completely different wallet

Answer

To encrypt the mnemonic file on disk

Answer

To allow wallet recovery without the seed phrase

Answer

To enable multi-signature transactions

Question 2

In the context of HD wallets, what does 'hardened derivation' prevent?

Accepted Answer

Derivation of parent private keys from child public keys

Answer

Reuse of addresses across the chain

Answer

Derivation of child public keys without the private key

Answer

Use of the wallet on multiple devices

Question 3

Which script type is associated with Pay-to-Witness-Public-Key-Hash (P2WPKH) native SegWit addresses?

Accepted Answer

Bech32

Answer

P2PKH

Answer

P2SH

Answer

P2PK

Question 4

What is key stretching in the context of Bitcoin wallet encryption?

Accepted Answer

Using a slow hash function to make brute-force attacks computationally expensive

Answer

Increasing the bit length of private keys

Answer

Splitting a key across multiple backups

Answer

Deriving multiple child keys from one parent

Question 5

A wallet exported as a WIF (Wallet Import Format) string starting with '5' indicates what?

Accepted Answer

An uncompressed private key on mainnet

Answer

A compressed public key on mainnet

Answer

A compressed private key on testnet

Answer

A BIP-38 encrypted key

Question 6

What is the risk of generating Bitcoin private keys using a weak random number generator?

Accepted Answer

Keys become predictable and funds can be stolen

Answer

Transactions will be rejected by the network

Answer

The wallet will not sync with the blockchain

Answer

Fee estimation becomes inaccurate

Question 7

Which BIP introduced the concept of hierarchical deterministic (HD) wallets to Bitcoin?

Accepted Answer

BIP-32

Answer

BIP-21

Answer

BIP-44

Answer

BIP-91