CBSE Key Management and Wallet Security 3

Question 1

What privacy risk arises from reusing the same blockchain address for multiple transactions?

Accepted Answer

Address linking enables transaction graph analysis to de-anonymize the user

Answer

Increased transaction fees due to UTXO consolidation requirements

Answer

Smart contracts deployed at that address become inaccessible

Answer

Node synchronization with the address slows significantly

Question 2

How does a Threshold Signature Scheme (TSS) differ fundamentally from traditional multisig?

Accepted Answer

TSS generates a single valid signature collaboratively without any party ever holding the complete private key

Answer

TSS requires a larger number of participants than multisig

Answer

TSS stores keys on a central coordination server for efficiency

Answer

TSS uses symmetric encryption while multisig relies on asymmetric algorithms

Question 3

Why is key escrow used in enterprise blockchain deployments?

Accepted Answer

To enable authorized recovery of keys when the primary holder is unavailable

Answer

To accelerate consensus and transaction validation speeds

Answer

To prevent unauthorized users from accessing wallets

Answer

To comply with on-chain gas limit protocol requirements

Question 4

What is the security implication of generating private keys using a weak or predictable random number generator?

Accepted Answer

Private keys become predictable and vulnerable to enumeration or brute-force attacks

Answer

Transactions generated by those keys will be processed slower

Answer

Smart contracts signed by those keys cannot be deployed

Answer

Block validation fails for transactions from weakly generated keys

Question 5

What is the primary security concern of storing blockchain private keys in a cloud-based key management service?

Accepted Answer

The cloud provider or an attacker breaching the provider gains potential access to stored keys

Answer

Cloud providers charge high fees that reduce the economic value of held assets

Answer

Cloud services cannot store elliptic curve cryptography key formats

Answer

Cloud storage reduces on-chain transaction confirmation speed

Question 6

What is the security purpose of cryptographic key rotation in a blockchain security program?

Accepted Answer

Periodically replacing keys to limit the damage window if a key is ever compromised

Answer

Migrating keys between different blockchain networks for interoperability

Answer

Converting keys from one cryptographic algorithm to a newer one

Answer

Distributing copies of existing keys to additional authorized administrators

Question 7

What is the significance of the 'gap limit' setting in an HD wallet's address discovery process?

Accepted Answer

The number of consecutive unused derived addresses the wallet scans when recovering funds

Answer

The maximum allowed transaction value before requiring additional confirmation

Answer

The minimum number of block confirmations required before funds are spendable

Answer

The maximum number of nodes allowed in the wallet's peer-to-peer network