Practice Test Geeks(C4) CryptoCurrency Certification Consortium Practice Test
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C4 Wallet Security & Key Management Flashcards

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Read the first 6 C4 Wallet Security & Key Management flashcards as text

  1. What is a hierarchical deterministic (HD) wallet in the context of cryptocurrency?

    Answer: A wallet that generates a tree of key pairs from a single seed phrase

    An HD wallet uses a single seed phrase to deterministically generate a hierarchical tree of private/public key pairs, per BIP32.

  2. Which BIP standard introduced the 12- or 24-word mnemonic seed phrase for wallet backup?

    Answer: BIP39

    BIP39 defines the standard for generating mnemonic phrases (12 or 24 words) that encode a wallet's seed entropy.

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

    Answer: Private keys never leave the secure element and are not exposed to internet-connected devices

    Hardware wallets store private keys in a tamper-resistant secure element, ensuring keys are never exposed to a potentially compromised host computer.

  4. What does a cold wallet refer to in cryptocurrency key management?

    Answer: A wallet stored on a device that is never connected to the internet

    A cold wallet (cold storage) keeps private keys completely offline, dramatically reducing exposure to remote attacks.

  5. In a multisignature (multisig) wallet setup described as '2-of-3,' what is required to authorize a transaction?

    Answer: Any 2 of the 3 private keys

    A 2-of-3 multisig wallet requires any 2 out of 3 designated private keys to sign and authorize a transaction.

  6. What is the purpose of a passphrase (sometimes called the '25th word') in BIP39 HD wallets?

    Answer: To add an additional layer of security by creating a completely different wallet from the same seed

    An optional BIP39 passphrase acts as a salt during seed derivation, producing an entirely different set of keys even with the same mnemonic.

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Sources & references

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  1. cryptoconsortium.org — Renewal, retake fee, retake policy, score release, eligibility, exam format, passing score, test dates, time limit, score validity · verified Oct 2026