Cryptocurrency Fundamentals and Wallets BFC Practice Questions (Page 2)

Questions 6–10

1. 6application · medium

   A user has a hardware wallet and wants to create a backup. They write down the 24-word recovery phrase on a piece of paper and store it in a home safe. What is the most important additional step to protect against physical loss or damage?

   • AMemorize the recovery phrase and destroy the paper copy.
   • BEmail the recovery phrase to yourself for safekeeping.
   • CTake a photo of the recovery phrase and save it in the cloud.
   • DStore a second copy of the recovery phrase in a different secure location.
   Reveal Solution Discussion Select an answer first
2. 7application · medium

   A government official is comparing Bitcoin to the national fiat currency. They note that the central bank can increase the money supply during a recession. Which characteristic of Bitcoin is most directly different in this regard?

   • ABitcoin transactions are irreversible once confirmed
   • BBitcoin is backed by physical gold reserves
   • CBitcoin uses a permissioned blockchain, so only authorized nodes can validate transactions
   • DBitcoin has a capped supply of 21 million coins, so its monetary policy is not controlled by a central authority
   Reveal Solution Discussion Select an answer first
4. 8foundation · easy

   What happens after a cryptocurrency transaction is broadcast to the network?

   • AIt is immediately considered final and irreversible.
   • BIt is sent directly to the recipient's wallet, which then updates its balance.
   • CIt is validated by nodes and then included in a block by a miner or validator.
   • DIt is encrypted and stored on a central server until the recipient is online.
   Reveal Solution Discussion Select an answer first
5. 9application · medium

   A company is evaluating a digital asset that is issued on an existing blockchain and represents a claim on future profits of the company. The asset is traded on a secondary market. How should this asset be classified?

   • AA utility token, because it provides access to a product or service.
   • BA security token, because it represents an investment contract and a claim on profits.
   • CA governance token, because it gives voting rights in a protocol.
   • DA payment coin, because it is used as a medium of exchange.
   Reveal Solution Discussion Select an answer first
6. 10application · medium

   A user receives an email that appears to be from their wallet provider, asking them to 'verify' their private key by entering it on a linked website. What is the most appropriate action?

   • AIgnore the email and report it as a phishing attempt
   • BClick the link and log in with your password, but do not enter the private key
   • CEnter the private key on the website to verify the wallet
   • DReply to the email asking for more information before acting
   Reveal Solution Discussion Select an answer first