Wallets and Key Management Flashcards

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

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.

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

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.

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

Answer: Bech32

Native SegWit P2WPKH addresses use the Bech32 encoding format, identifiable by the 'bc1q' prefix on mainnet.

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

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.

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

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'.

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

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.

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

Answer: BIP-32

BIP-32 defined the standard for HD wallets, enabling a single seed to generate a tree of key pairs deterministically.