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Wallets and Key Management Flashcards

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  1. What is 'key sharding' in the context of wallet security?

    Answer: Splitting a private key into multiple fragments so that a threshold of fragments is needed to reconstruct it

    Key sharding (often implemented via Shamir's Secret Sharing) splits a private key into shares, requiring a minimum number of shares to reconstruct the key.

  2. Which wallet type is MOST resistant to phishing attacks?

    Answer: A hardware wallet with a screen that displays transaction details

    Hardware wallets with displays show the actual transaction details on a trusted screen, preventing malicious software from substituting a different recipient address.

  3. What is the function of a 'wallet descriptor' in Bitcoin?

    Answer: A standardized expression that fully describes the script and keys needed to spend from a wallet

    A wallet descriptor encodes the complete spending policy—including key derivation paths and script type—enabling any compatible wallet software to restore the wallet accurately.

  4. What does 'address derivation' mean in a hierarchical deterministic wallet?

    Answer: Mathematically generating child public keys and addresses from a master key using a derivation path

    Address derivation uses a deterministic algorithm (e.g., HMAC-SHA512) to produce a sequence of child keys from a master seed, each at a specific path index.

  5. Why is it important to verify a hardware wallet's firmware integrity before use?

    Answer: To confirm the firmware has not been tampered with, which could allow key extraction

    Compromised firmware could silently exfiltrate private keys or modify transaction details, so verifying cryptographic signatures on firmware prevents supply-chain attacks.

  6. What is a 'sweep' operation in cryptocurrency wallet management?

    Answer: Transferring all funds from one wallet (e.g., a paper wallet) to a new wallet by spending the entire balance

    Sweeping moves the entire balance out of a source address into a new wallet, retiring the old private key after use.

  7. Which standard defines the script types (Legacy, SegWit, Native SegWit) encoded in BIP44/49/84 derivation paths?

    Answer: BIP84 for Native SegWit (bech32), BIP49 for P2SH-SegWit, BIP44 for Legacy

    BIP44 covers Legacy (P2PKH), BIP49 covers wrapped SegWit (P2SH-P2WPKH), and BIP84 covers Native SegWit (P2WPKH/bech32), each with distinct derivation paths.