CBSE Key Management and Wallet Security 2

Question 1

What fundamentally distinguishes a non-custodial wallet from a custodial wallet?

Accepted Answer

In a non-custodial wallet, the user alone controls and holds their private keys

Answer

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.

Question 2

Why is storing a seed phrase in a digital file on an internet-connected device considered a critical security failure?

Accepted Answer

It exposes the seed phrase to malware, keyloggers, cloud breaches, and unauthorized access

Answer

Digitally stored seed phrases on connected devices can be captured by malware, keyloggers, or cloud account breaches, leading to complete and unrecoverable wallet compromise.

Question 3

Which attack type specifically manipulates users into voluntarily revealing wallet credentials or seed phrases?

Accepted Answer

Phishing and social engineering attacks

Answer

Social engineering and phishing attacks exploit human psychology to trick users into voluntarily disclosing wallet credentials, seed phrases, or private keys to attackers.

Question 4

What is the core security purpose of the BIP-32 standard?

Accepted Answer

To specify the hierarchical deterministic (HD) wallet key derivation standard

Answer

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.

Question 5

What is the primary security vulnerability associated with paper wallets?

Accepted Answer

Physical loss, theft, or destruction permanently destroys access to funds

Answer

Paper wallets exist only as physical objects; if lost, stolen, burned, or deteriorated, the private key is permanently irrecoverable with no backup mechanism.

(CBSE) Certified Blockchain Security Expert Practice Test

(CBSE) Certified Blockchain Security Expert Practice Test

CBSE Key Management and Wallet Security 2