Wallets and Asset Security Flashcards

What is a 'watch-only' wallet?

Answer: A wallet that monitors blockchain activity without holding private keys

A watch-only wallet stores only public keys/addresses, allowing balance and transaction monitoring without the ability to spend funds.

Which attack vector exploits clipboard hijacking to redirect cryptocurrency transactions?

Answer: Clipper malware

Clipper malware monitors the clipboard and replaces copied wallet addresses with the attacker's address, redirecting funds during paste.

What does 'address reuse' primarily compromise?

Answer: Privacy and traceability of funds

Reusing addresses allows blockchain analysts to link transactions and build a profile of a user's financial activity, reducing privacy.

In multisig notation, what does '3-of-5' mean?

Answer: 5 keys are generated and 3 must sign to authorize a transaction

3-of-5 multisig means 5 keys exist and any 3 must co-sign for a transaction to be valid.

What is the primary risk of storing a seed phrase as a digital photo on a smartphone?

Answer: Cloud backup or malware could expose it

Digital photos often auto-sync to cloud services or can be accessed by malware, exposing the seed phrase to remote theft.

Which standard defines the derivation paths used in HD wallets (e.g., m/44'/0'/0'/0)?

Answer: BIP-44

BIP-44 defines the multi-account hierarchy and coin-type derivation path structure used by most HD wallets.

What security advantage does Shamir's Secret Sharing (SSS) offer for seed phrase backup?

Answer: It splits the secret into shares where a threshold number is needed to reconstruct it

SSS divides a secret into N shares such that any K shares can reconstruct it, eliminating a single point of failure without requiring all shares.