Securing Blockchain Transactions with Cryptographic Techniques BFC Practice Questions (Page 1)

Questions 1–5

1. 1application · medium

   A fintech startup is building a custodial wallet service. A developer proposes signing each transaction by loading the private key into memory, signing, and then discarding it. The CISO requires that the private key never be exposed to the application server. Which approach best satisfies the requirement while still allowing the server to initiate transactions?

   • AStore the private key in a database column with restricted access permissions.
   • BEncrypt the private key with a passphrase and store it in the application's configuration file.
   • CUse a hardware security module (HSM) that performs the signing operation internally and returns only the signature.
   • DGenerate a new private key for each transaction and discard it after signing.
   Reveal Solution Discussion Select an answer first
2. 2foundation · easy

   In blockchain, which cryptographic technique is primarily used to create digital signatures?

   • AAsymmetric encryption
   • BSymmetric encryption
   • CHash-based message authentication code (HMAC)
   • DSteganography
   Reveal Solution Discussion Select an answer first
4. 3expert · hard

   A blockchain network uses a hash-based consensus mechanism where miners must find a nonce that produces a hash below a target. An attacker with significant hashing power is attempting to manipulate the network. Which property of the hash function is most critical to prevent the attacker from gaining an unfair advantage?

   • APreimage resistance, so the attacker cannot work backward from the target to find a nonce.
   • BAvalanche effect, so a small change in the nonce produces a completely different hash.
   • CSecond preimage resistance, so the attacker cannot find a different block with the same hash as an existing block.
   • DCollision resistance, so the attacker cannot find two different blocks with the same hash.
   Reveal Solution Discussion Select an answer first
5. 4foundation · easy

   Which practice is considered a best practice for securely storing a blockchain private key?

   • AStoring it in a plain text file on the computer
   • BEmailing it to yourself for safekeeping
   • CUsing a hardware wallet that keeps the key offline
   • DSharing it with a trusted friend for backup
   Reveal Solution Discussion Select an answer first
6. 5foundation · easy

   How does proof-of-work (PoW) use cryptographic hash functions?

   • ATo require miners to find a hash that meets a difficulty target
   • BTo create a digital signature for each block
   • CTo generate the private keys of miners
   • DTo encrypt the block data so only miners can read it
   Reveal Solution Discussion Select an answer first