Cryptocurrency Fundamentals and Wallets BFC Practice Questions (Page 5)

Questions 21–25

1. 21foundation · easy

   What is the primary function of a cryptocurrency wallet?

   • ATo mine new cryptocurrency blocks and earn rewards.
   • BTo store the user's cryptocurrency coins and tokens in a secure digital vault.
   • CTo validate and confirm transactions on the blockchain.
   • DTo manage the user's private and public keys and enable the signing of transactions.
   Reveal Solution Discussion Select an answer first
2. 22application · medium

   A user submits a Bitcoin transaction from their wallet. The transaction is broadcast to the network but does not appear in the next block. The user's wallet shows the transaction as 'unconfirmed'. What is the most likely reason the transaction is not yet included in a block?

   • AThe transaction fee was too low relative to the current network congestion, so miners prioritized other transactions
   • BThe transaction's digital signature was invalid, so nodes rejected it
   • CThe transaction was encrypted with the wrong public key, so it could not be decrypted by the network
   • DThe wallet used a private key that did not match the public key, so the transaction was queued for manual review
   Reveal Solution Discussion Select an answer first
4. 23foundation · easy

   How does blockchain technology underpin cryptocurrencies and ensure decentralization?

   • ABy encrypting all transactions with a private key that only the central bank can decrypt.
   • BBy maintaining a single, centralized ledger controlled by a trusted third party.
   • CBy using a distributed ledger replicated across many nodes, with consensus mechanisms preventing any single entity from controlling the network.
   • DBy storing all transaction data on a single server that is accessible only to authorized users.
   Reveal Solution Discussion Select an answer first
5. 24foundation · easy

   What is the main difference between custodial and non-custodial wallets?

   • ACustodial wallets are used only by businesses, while non-custodial wallets are used only by individuals.
   • BIn a custodial wallet, a third party holds the private keys; in a non-custodial wallet, the user holds the private keys.
   • CCustodial wallets are always free, while non-custodial wallets charge fees.
   • DCustodial wallets are always hardware devices, while non-custodial wallets are software applications.
   Reveal Solution Discussion Select an answer first
6. 25application · medium

   A user sends a transaction to a merchant. The merchant wants to ensure the transaction is highly unlikely to be reversed. What should they wait for?

   • AThe transaction to receive multiple confirmations
   • BThe transaction to be included in the next block
   • CThe transaction to be signed by the recipient
   • DThe transaction to be broadcast to the mempool
   Reveal Solution Discussion Select an answer first