Cryptocurrency Wallets and Security 2

Question 1

What is a hardware wallet's primary advantage over a software wallet?

Accepted Answer

Private keys never touch an internet-connected device

Answer

Hardware wallets store private keys in an isolated chip that is never exposed to the internet, protecting against malware and remote attacks.

Question 2

Which attack involves tricking a user into revealing their seed phrase through a fake customer support interaction?

Accepted Answer

Social engineering

Answer

Social engineering exploits human trust rather than technical vulnerabilities, often through impersonation of support staff to extract seed phrases.

Question 3

A BIP39 seed phrase typically consists of how many words?

Accepted Answer

12 or 24

Answer

BIP39 defines seed phrase lengths of 12 or 24 words, which encode 128 or 256 bits of entropy respectively.

Question 4

What does 'change address' mean in a Bitcoin transaction?

Accepted Answer

The address that receives unspent funds returned to the sender

Answer

Bitcoin transactions consume entire UTXOs, and any excess amount beyond the payment is sent back to the sender via a change address.

Question 5

What risk does address reuse introduce in a cryptocurrency wallet?

Accepted Answer

Reduced privacy by linking transactions to one identity

Answer

Reusing addresses allows anyone to trace the full transaction history of that address, degrading financial privacy.

Cryptocurrency Practice Test