Bitcoin Security Protocols Overview Quiz

1. What algorithm does Bitcoin use to encrypt the information from a block?

• Advanced Encryption Standard (AES)
• Secure Hash Algorithm 256-bit (SHA-256)
• Data Encryption Standard (DES)
• Rivest Cipher (RC4)

2. What does SHA-256 ensure in Bitcoin?

• It guarantees that each transaction is reversible and can be undone.
• It verifies digital signatures for all transactions in the blockchain.
• It ensures data integrity by converting information into a unique 64-digit hexadecimal number in the blockchain.
• It encrypts the personal information of Bitcoin users for security.

3. What algorithm does Bitcoin use for digital signatures?

• RSA
• SHA-1
• secp256k1
• AES

4. What does secp256k1 verify in Bitcoin?

• It verifies the authenticity and integrity of digital messages, ensuring they’re unaltered and from the expected sender.
• It validates the physical location of Bitcoin miners and their transactions.
• It ensures transactions are processed quickly and efficiently without any delays.
• It guarantees the privacy of users by hiding their identities during transactions.

5. How does decentralization benefit Bitcoin security?

• It simplifies transactions by allowing users to avoid network fees entirely.
• It ensures security through decentralization, operating on a peer-to-peer network that distributes data across nodes, preventing centralized control and manipulation of transaction data.
• It enhances speed by processing every transaction within seconds using a single server.
• It allows for automatic refunds in every unfulfilled transaction without user intervention.

6. What makes transactions in Bitcoin transparent yet pseudonymous?

• Transactions are encrypted and confidential, providing no transparency or accountability in the system.
• Transactions are secret yet visible, allowing users to remain anonymous while tracing funds.
• Transactions are transparent yet pseudonymous, enhancing security and trust by minimizing the risk of corruption and ensuring fair transactions.
• Transactions are visible and public, erasing any possibility of privacy and security.

7. What is the purpose of using TLS/SSL in crypto wallet security?

• It ensures that all wallet software is updated regularly for security.
• It encrypts all communications between the wallet and external servers to prevent interception and man-in-the-middle (MitM) attacks.
• It reduces transaction fees for wallet users to save money.
• It speeds up the processing time of transactions for quick access.

8. What is End-to-End Encryption (E2EE) used for in crypto transactions?

• It allows third parties to access and analyze transaction data for auditing.
• It verifies the identity of all users involved in the transaction.
• It ensures that data is encrypted at the source and only decrypted at the destination, leaving no room for intermediaries to access the data.
• It compresses data to reduce transaction size for efficiency.

9. What are MitM attacks in crypto wallet security?

• MitM attacks are attempts to double-spend coins on a blockchain.
• MitM attacks involve intercepting communication between the wallet and the server, allowing attackers to steal data or alter transactions.
• MitM attacks happen when two wallets accidentally share the same private key.
• MitM attacks allow direct access to the Bitcoin blockchain for processing transactions.

10. How can MitM attacks be mitigated?

• Using outdated software
• Turning off antivirus software
• Using TLS/SSL encryption
• Disabling firewalls

11. What are physical threats to crypto wallets?

• Physical threats include theft or loss of crypto wallet devices, which can result in unauthorized access.
• Software glitches in mobile applications that freeze access to funds.
• Cyberattacks that target online exchanges to steal private keys.
• Malware infections that corrupt storage media and erase data.

12. How can physical threats be mitigated?

• Installing antivirus software on devices
• Using Hardware Security Modules (HSMs) for key storage
• Regularly updating operating systems
• Avoiding cloud storage systems

13. What is the purpose of certificate pinning in crypto wallet security?

• It ensures the app communicates only with trusted servers, preventing interception and man-in-the-middle (MitM) attacks.
• It verifies user identities before transactions take place.
• It generates random keys for every transaction automatically.
• It improves the speed of transaction processing within the network.

14. Why should users avoid using public Wi-Fi for transactions?

• It is advised to avoid using public Wi-Fi for transactions to prevent interception and man-in-the-middle (MitM) attacks.
• Public Wi-Fi protects user data automatically during transactions.
• Using public Wi-Fi makes transactions faster, so it should be preferred.
• Public Wi-Fi is always secure for financial transactions without risks.

15. What is the purpose of using a VPN in crypto wallet security?

• It ensures the wallet`s balance remains completely anonymous from all parties.
• It prevents the wallet from being hacked by external devices entirely.
• It secures further communications by encrypting data when accessing the crypto wallet over public or untrusted networks.
• It guarantees the wallet can only be accessed from authorized devices.

16. What is the role of Hardware Security Modules (HSMs) in crypto wallet security?

• HSMs prevent all forms of hacking attempts completely.
• HSMs protect keys even if the device is stolen by securely storing them.
• HSMs speed up transaction processing times significantly.
• HSMs are used solely for creating new cryptocurrencies.

17. What is biometric authentication in crypto wallet security?

• It is a method of securing wallet access using fingerprints, facial recognition, etc.
• It is a system that tracks user behavior for security verification.
• It is a method that uses passwords and usernames for access control.
• It is a technique that requires a physical key to unlock a wallet.

18. What is remote wipe in crypto wallet security?

• It is the ability to enhance wallet graphics for user interface.
• It is the capability to erase wallet data if a device is lost or stolen.
• It is a feature to increase wallet transaction speeds.
• It is a function that allows tracking of transaction history.

19. What is the purpose of using multi-signature wallets in crypto security?

• It allows for faster transactions by eliminating the need for confirmations.
• It stores all private keys in a single location for ease of access.
• It increases transaction fees for every approval needed.
• It ensures that no single party has complete control over the funds by requiring more than one private key to authorize a transaction.

20. How does a multi-signature setup reduce the risk of unauthorized access?

• It removes the need for private keys altogether.
• It locks funds permanently if one key is lost.
• It greatly reduces the risk of unauthorized access as an attacker would need to compromise multiple keys simultaneously to gain control of the assets.
• It allows unlimited access as only one key is needed.

21. What is Shamir`s Secret Sharing in crypto security?

• It is a process of completely encrypting the entire wallet data.
• It is an advanced measure that provides enhanced security for managing large cryptocurrency holdings by dividing the private key into multiple parts, each held by different parties.
• It is a technique for sharing passwords securely via email.
• It is a method to combine multiple keys into one for easier access.

22. Why is two-factor authentication (2FA) crucial in crypto wallet security?

• It adds a second layer of defense against unauthorized access by requiring users to provide two forms of identification before accessing their crypto wallets.
• It generates a backup key to restore the wallet if lost.
• It allows unlimited access to all wallet functions without verification.
• It only requires a username and password to access the wallet.

23. How does two-factor authentication work in practice?

• It mandates physical verification by a bank representative to confirm identity.
• It only relies on security questions set by the user for authentication.
• It typically involves a password and a one-time code sent to the user’s mobile device, such as using Google Authenticator.
• It requires two passwords entered one after the other in sequence.

24. What is the real-life use case of implementing two-factor authentication in software wallets?

• A common method is storing passwords securely in a vault to prevent unauthorized access.
• A real-life use case is enabling two-factor authentication by linking the wallet to an app like Google Authenticator, as seen in Binance Wallet.
• Regularly updating the software wallet`s core features is a fundamental practice for security.
• It is often used for generating random passwords to secure user accounts.

25. What is the primary benefit of using a multi-signature wallet?

• It enhances transaction speeds significantly.
• It ensures no single party has complete control over the funds.
• It automatically converts cryptocurrency into fiat.
• It simplifies transaction verification for individuals.

26. How does a multi-signature wallet with two out of three keys authorization work?

• It prevents any transactions from being executed under any circumstances.
• It uses only one key for authorization, making it easier for any user.
• It requires two out of three keys to authorize any outgoing transaction, greatly reducing the risk of unauthorized access.
• It allows any one key to authorize all transactions without additional checks.

27. What is the role of Hardware Wallets in crypto security?

• Hardware wallets generate trading signals for cryptocurrency investments.
• Hardware wallets provide secure storage of seed phrases and private keys, protecting them against physical threats like theft or loss.
• Hardware wallets eliminate the need for passwords entirely in crypto transactions.
• Hardware wallets monitor market prices continuously for better transactions.

28. What is the purpose of enabling two-factor authentication in crypto wallets?

• It allows for unlimited access without a password, simplifying login processes.
• It adds an extra layer of security by requiring users to provide two forms of identification before accessing their crypto wallets.
• It improves transaction speed by reducing confirmation times for wallet access.
• It automatically generates new wallets for each transaction, enhancing anonymity.

29. What is the significance of using End-to-End Encryption (E2EE) in crypto transactions?

• It prevents all forms of digital transactions from being executed.
• It makes transaction data visible to third-party intermediaries.
• It allows all parties to access transaction data without restriction.
• It ensures that data is encrypted at the source and only decrypted at the destination, leaving no room for intermediaries to access the data.

30. What is the primary function of TLS/SSL encryption in crypto wallet security?

• It validates the identity of users before they can access the wallet.
• It encrypts all communications between the wallet and external servers to prevent interception and man-in-the-middle (MitM) attacks.
• It tracks user transactions for compliance with financial regulations and reporting.
• It stores user passwords securely on the local device to prevent unauthorized access.