CBSE Key Management and Wallet Security

Question 1

What is a Hardware Security Module (HSM) primarily used for in blockchain environments?

Accepted Answer

To securely generate, store, and manage cryptographic keys

Answer

HSMs are tamper-resistant hardware devices purpose-built to securely generate, store, and manage cryptographic keys, preventing key extraction even by privileged users.

Question 2

What is the primary purpose of a BIP-39 mnemonic seed phrase?

Accepted Answer

To provide a human-readable backup encoding for generating private keys

Answer

BIP-39 defines a standard for generating a 12-24 word mnemonic phrase that encodes the entropy used to deterministically derive a wallet's private keys.

Question 3

Which wallet type provides the strongest protection against remote network-based attacks?

Accepted Answer

Cold wallet stored on an air-gapped hardware device

Answer

Cold wallets store private keys offline on air-gapped devices, making them immune to remote or network-based attacks since keys never touch an internet-connected system.

Question 4

What does a Hierarchical Deterministic (HD) wallet primarily enable?

Accepted Answer

Generation of an unlimited tree of key pairs from a single master seed

Answer

HD wallets (BIP-32) allow generating a hierarchical tree of key pairs from one master seed, enabling organized key management without storing each individual key separately.

Question 5

What is the primary security risk of using a hot wallet for storing cryptocurrency assets?

Accepted Answer

Exposure of private keys to internet-connected systems vulnerable to remote attacks

Answer

Hot wallets are connected to the internet, making private keys vulnerable to malware, phishing, and remote attacks that could expose or steal keys.

(CBSE) Certified Blockchain Security Expert Practice Test

(CBSE) Certified Blockchain Security Expert Practice Test

CBSE Key Management and Wallet Security