Key Management and Wallet Security Flashcards
7 cards from real CBSE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Key Management and Wallet Security flashcards as text
What fundamentally distinguishes a non-custodial wallet from a custodial wallet?
Answer: In a non-custodial wallet, the user alone controls and holds their private keys
Non-custodial wallets give users full ownership of their private keys, whereas custodial wallets have a third party (such as an exchange) holding keys on the user's behalf.
Why is storing a seed phrase in a digital file on an internet-connected device considered a critical security failure?
Answer: It exposes the seed phrase to malware, keyloggers, cloud breaches, and unauthorized access
Digitally stored seed phrases on connected devices can be captured by malware, keyloggers, or cloud account breaches, leading to complete and unrecoverable wallet compromise.
Which attack type specifically manipulates users into voluntarily revealing wallet credentials or seed phrases?
Answer: Phishing and social engineering attacks
Social engineering and phishing attacks exploit human psychology to trick users into voluntarily disclosing wallet credentials, seed phrases, or private keys to attackers.
What is the core security purpose of the BIP-32 standard?
Answer: To specify the hierarchical deterministic (HD) wallet key derivation standard
BIP-32 establishes the HD wallet standard defining how an entire tree of key pairs can be deterministically derived from a single root seed using HMAC-SHA512.
What is the primary security vulnerability associated with paper wallets?
Answer: Physical loss, theft, or destruction permanently destroys access to funds
Paper wallets exist only as physical objects; if lost, stolen, burned, or deteriorated, the private key is permanently irrecoverable with no backup mechanism.
What does Shamir's Secret Sharing (SSS) accomplish in blockchain key management?
Answer: It splits a secret into shares where a minimum threshold can reconstruct the original
Shamir's Secret Sharing splits a key into N shares where any M shares reconstruct the secret, distributing risk so no single share compromises the key and no single loss destroys it.
In blockchain security, what specifically does 'cold storage' refer to?
Answer: Keeping private keys on systems that have never been connected to the internet
Cold storage means private keys are kept on air-gapped systems, hardware wallets, or paper wallets with no internet connectivity, protecting against all remote attack vectors.