CBP Wallets and Key Management 2 — Questions and Answers
Question 1: What is the purpose of a BIP-39 passphrase (sometimes called the '25th word')?
- To encrypt the mnemonic file on disk
- To add an additional layer of security that creates a completely different wallet (Correct answer)
- To allow wallet recovery without the seed phrase
- To enable multi-signature transactions
Correct answer: To add an additional layer of security that creates a completely different wallet
A BIP-39 passphrase acts as an optional extension to the seed, generating an entirely different set of keys and addresses, providing plausible deniability.
Question 2: In the context of HD wallets, what does 'hardened derivation' prevent?
- Reuse of addresses across the chain
- Derivation of parent private keys from child public keys (Correct answer)
- Derivation of child public keys without the private key
- Use of the wallet on multiple devices
Correct answer: Derivation of parent private keys from child public keys
Hardened derivation prevents an attacker who knows a child private key and the parent public key from deriving the parent private key.
Question 3: Which script type is associated with Pay-to-Witness-Public-Key-Hash (P2WPKH) native SegWit addresses?
- P2PKH
- P2SH
- Bech32 (Correct answer)
- P2PK
Correct answer: Bech32
Native SegWit P2WPKH addresses use the Bech32 encoding format, identifiable by the 'bc1q' prefix on mainnet.
Question 4: What is key stretching in the context of Bitcoin wallet encryption?
- Increasing the bit length of private keys
- Using a slow hash function to make brute-force attacks computationally expensive (Correct answer)
- Splitting a key across multiple backups
- Deriving multiple child keys from one parent
Correct answer: Using a slow hash function to make brute-force attacks computationally expensive
Key stretching applies algorithms like PBKDF2 or bcrypt to a password, deliberately increasing computation time to deter brute-force attacks.
Question 5: A wallet exported as a WIF (Wallet Import Format) string starting with '5' indicates what?
- A compressed public key on mainnet
- An uncompressed private key on mainnet (Correct answer)
- A compressed private key on testnet
- A BIP-38 encrypted key
Correct answer: An uncompressed private key on mainnet
WIF strings beginning with '5' represent uncompressed private keys on Bitcoin mainnet; compressed keys start with 'K' or 'L'.
Question 6: What is the risk of generating Bitcoin private keys using a weak random number generator?
- Transactions will be rejected by the network
- Keys become predictable and funds can be stolen (Correct answer)
- The wallet will not sync with the blockchain
- Fee estimation becomes inaccurate
Correct answer: Keys become predictable and funds can be stolen
Weak entropy means private keys can be reproduced by an attacker, allowing them to derive the corresponding public key and steal funds.
Question 7: Which BIP introduced the concept of hierarchical deterministic (HD) wallets to Bitcoin?
- BIP-21
- BIP-32 (Correct answer)
- BIP-44
- BIP-91
Correct answer: BIP-32
BIP-32 defined the standard for HD wallets, enabling a single seed to generate a tree of key pairs deterministically.
CBP Wallets and Key Management 2
What is the purpose of a BIP-39 passphrase (sometimes called the '25th word')?