Cryptocurrency Fundamentals and Wallets BFC Practice Questions (Page 6)

Questions 26–30

1. 26foundation · easy

   Which of the following best defines a cryptocurrency?

   • AA virtual currency used only within online games and social platforms, with no real-world value.
   • BA digital payment system that relies on a central server to maintain the ledger and authorize all transactions.
   • CA digital asset that uses cryptographic techniques to secure transactions and control the creation of new units, operating independently of a central authority.
   • DA digital representation of a fiat currency issued by a central bank and backed by government reserves.
   Reveal Solution Discussion Select an answer first
2. 27application · medium

   A user wants to store a large amount of cryptocurrency for long-term holding and is willing to sacrifice convenience for maximum security. Which wallet type is most appropriate?

   • AA custodial exchange wallet with two-factor authentication
   • BA hardware wallet that keeps private keys offline and requires physical confirmation for transactions
   • CA desktop wallet that is only opened when the computer is offline
   • DA mobile hot wallet with biometric authentication
   Reveal Solution Discussion Select an answer first
4. 28expert · hard · select all that apply

   A security auditor is reviewing a company's cryptocurrency wallet procedures. Which of the following practices are considered secure and should be recommended? (Select all that apply.)

   • AStore the recovery phrase in a fireproof and waterproof safe.
   • BUse a hardware wallet for large amounts and keep only small amounts in a hot wallet.
   • CEnable two-factor authentication on all exchange accounts.
   • DShare the recovery phrase with a trusted colleague for backup.
   • EKeep a digital copy of the recovery phrase in an encrypted cloud drive.
   Check answers Discussion Select an answer first
5. 29application · medium

   A blockchain network uses a Proof of Stake (PoS) consensus mechanism. A validator is found to have signed two conflicting blocks at the same height. What is the most likely consequence under standard PoS slashing rules?

   • AThe validator's stake is partially or fully slashed, and they may be ejected from the validator set.
   • BThe validator is banned from the network but their stake remains intact.
   • CThe validator receives a reward for proposing two blocks, increasing their stake.
   • DThe network automatically forks to include both blocks, and the validator is not penalized.
   Reveal Solution Discussion Select an answer first
6. 30foundation · easy

   What is an effective way to avoid phishing attacks targeting cryptocurrency wallets?

   • AShare your wallet address only with people you know personally.
   • BDisable two-factor authentication to make logging in faster.
   • CAlways click links in emails from your wallet provider to verify your account.
   • DVerify the website URL and use bookmarks to access your wallet service.
   Reveal Solution Discussion Select an answer first