CBP - Certified Bitcoin Professional Wallets and Key Management Questions and Answers

Question 1

A user wants to store a significant amount of Bitcoin for long-term holding with the highest level of security against online threats.
Which of the following wallet types is the MOST appropriate for this purpose?

Accepted Answer

A hardware wallet

Answer

A web-based wallet

Answer

A mobile software wallet

Answer

A custodial exchange wallet

Question 2

What is the primary advantage of using a Hierarchical Deterministic (HD) wallet, as defined by BIP 32?

Accepted Answer

It allows a user to restore all keys and addresses from a single master seed.

Answer

It requires a separate backup for every new address generated.

Answer

It generates a single static address to enhance user privacy.

Answer

It encrypts the private key with a user-defined password on the blockchain.

Question 3

A business wants to secure its corporate Bitcoin funds by requiring approvals from multiple executives before any transaction can be sent. Which key management technique should they implement?

Accepted Answer

Multi-signature (multisig) scheme

Answer

Passphrase encryption (BIP 38)

Answer

Wallet Import Format (WIF)

Answer

Simplified Payment Verification (SPV)

Question 4

When a user restores a Bitcoin wallet using a 12-word mnemonic seed phrase, what is being recovered?

Accepted Answer

The master private key, from which all other keys and addresses are derived.

Answer

The Bitcoin balance directly from a centralized server.

Answer

A snapshot of the wallet's transaction history stored on the user's computer.

Answer

The user's public key, which is then used to find the private key.

Question 5

Which of the following is a characteristic of a non-deterministic wallet?

Accepted Answer

It is often referred to as a 'Just a Bunch Of Keys' (JBOK) wallet.

Answer

All keys are derived from a single master seed.

Answer

Backing it up requires only saving a single seed phrase.

Answer

It is the standard for most modern Bitcoin software wallets.

Question 6

A user is setting up a new hardware wallet and is prompted to add an optional passphrase on top of their 24-word recovery seed. What is the primary function of this passphrase?

Accepted Answer

It acts as a '13th word' or '25th word' to create a completely new, hidden wallet.

Answer

It encrypts the wallet's user interface.

Answer

It serves as a second password to log into the wallet's software application.

Answer

It is required by the Bitcoin protocol for all transactions.

A user wants to store a significant amount of Bitcoin for long-term holding with the highest level of security against online threats.Which of the following wallet types is the MOST appropriate for this purpose?

A user wants to store a significant amount of Bitcoin for long-term holding with the highest level of security against online threats.
Which of the following wallet types is the MOST appropriate for this purpose?