CCE Wallets and Asset Security 4

Question 1

What cryptographic primitive does Bitcoin use to generate a public key from a private key?

Accepted Answer

Elliptic Curve Multiplication on secp256k1

Answer

Bitcoin uses elliptic curve point multiplication on the secp256k1 curve—a one-way operation that derives a public key from a private key.

Question 2

What is the recommended practice when receiving a hardware wallet as a gift or from an unknown seller?

Accepted Answer

Factory reset it and generate a new seed before use

Answer

Any pre-owned or suspect hardware wallet should be fully reset and a new seed generated on the device to eliminate any pre-loaded backdoors.

Question 3

Which protocol allows a hardware wallet to sign a transaction without exposing the private key to the connected computer?

Accepted Answer

Blind signing via secure element isolation

Answer

Hardware wallets use a secure element that performs all signing internally; only the signature (not the key) is returned to the host computer.

Question 4

What is 'transaction malleability' and which upgrade largely addressed it in Bitcoin?

Accepted Answer

Altering a transaction's unique identifier before confirmation; fixed by SegWit

Answer

Transaction malleability allowed third parties to alter a transaction's txid before confirmation; Segregated Witness (SegWit) separated signature data and resolved this.

Question 5

When setting up a multisig wallet, why is backing up each co-signer's extended public key (xpub) critical?

Accepted Answer

xpubs are needed to regenerate the multisig redeem script for recovery

Answer

To recover a multisig wallet, you need the redeem script which requires all co-signers' xpubs; losing one makes funds inaccessible even with enough private keys.

(CCE) Certified Cryptocurrency Expert Practice Test

(CCE) Certified Cryptocurrency Expert Practice Test

CCE Wallets and Asset Security 4