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Wallets and Key Management Flashcards

7 cards from real Cryptocurrency practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. What is the purpose of a BIP39 mnemonic phrase?

    Answer: To represent a hierarchical deterministic wallet seed in human-readable words

    BIP39 defines a standard for encoding a random seed as a 12- or 24-word mnemonic phrase, making it easier for humans to back up an HD wallet.

  2. In a hierarchical deterministic (HD) wallet, what does the derivation path m/44'/0'/0'/0/0 specify?

    Answer: The index of a specific key within the HD tree following the BIP44 standard

    BIP44 defines a standard derivation path structure where each level (purpose, coin type, account, change, index) narrows down to a specific key in the tree.

  3. Which attack involves monitoring power consumption or electromagnetic emissions to extract a private key from a hardware wallet?

    Answer: Side-channel attack

    Side-channel attacks exploit physical information leaked during cryptographic operations, such as power usage, timing, or electromagnetic emissions.

  4. What is a 'watch-only' wallet?

    Answer: A wallet containing only public keys, used to monitor balances without spending ability

    A watch-only wallet holds public addresses or public keys, allowing balance and transaction monitoring without exposing private keys.

  5. What does 'key stretching' accomplish when used in wallet encryption?

    Answer: It makes brute-force attacks more computationally expensive by deriving a stronger key from a password

    Key stretching algorithms like PBKDF2 or bcrypt apply many hash iterations to a password, dramatically increasing the cost of brute-force attempts.

  6. What is the risk of reusing Bitcoin addresses?

    Answer: It can reduce privacy and potentially weaken cryptographic security over time

    Address reuse links transactions together, reducing privacy, and repeated signing with the same key can expose information that weakens ECDSA security.

  7. Which statement best describes a 'paper wallet'?

    Answer: A physical printout of a private key and corresponding public address

    A paper wallet is a physical document containing a printed private key and public address, kept offline as a form of cold storage.