CCE Wallets and Asset Security 2 — Questions and Answers
Question 1: What is a 'watch-only' wallet?
- A wallet that monitors blockchain activity without holding private keys (Correct answer)
- A wallet that requires a second device to confirm transactions
- A wallet that only accepts stablecoins
- A wallet with read-only access to exchange order books
Correct 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.
Question 2: Which attack vector exploits clipboard hijacking to redirect cryptocurrency transactions?
- Phishing
- Cryptojacking
- Clipper malware (Correct answer)
- SIM swapping
Correct answer: Clipper malware
Clipper malware monitors the clipboard and replaces copied wallet addresses with the attacker's address, redirecting funds during paste.
Question 3: What does 'address reuse' primarily compromise?
- Transaction speed
- Privacy and traceability of funds (Correct answer)
- Mining rewards
- Smart contract execution
Correct 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.
Question 4: In multisig notation, what does '3-of-5' mean?
- 5 keys are generated and 3 must sign to authorize a transaction (Correct answer)
- 3 wallets share 5 keys equally
- A transaction requires 5 confirmations from 3 nodes
- 3 of 5 backup phrases must match
Correct 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.
Question 5: What is the primary risk of storing a seed phrase as a digital photo on a smartphone?
- Photo compression corrupts the words
- Cloud backup or malware could expose it (Correct answer)
- QR code readers cannot parse text photos
- Smartphones distort BIP-39 word ordering
Correct 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.
Question 6: Which standard defines the derivation paths used in HD wallets (e.g., m/44'/0'/0'/0)?
- BIP-32
- BIP-39
- BIP-44 (Correct answer)
- BIP-141
Correct answer: BIP-44
BIP-44 defines the multi-account hierarchy and coin-type derivation path structure used by most HD wallets.
Question 7: What security advantage does Shamir's Secret Sharing (SSS) offer for seed phrase backup?
- It encrypts the seed with a PIN
- It splits the secret into shares where a threshold number is needed to reconstruct it (Correct answer)
- It stores the seed on multiple blockchains simultaneously
- It converts the seed to a hardware-readable QR code
Correct 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.
CCE Wallets and Asset Security 2
What is a 'watch-only' wallet?