UPSC Previous Year Question | Prelims GS | 2016

With reference to 'Bitcoins', sometimes seen in the news, which of the following statements is/are correct? 1. Bitcoins are tracked by the Central Banks of the countries. 2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address. 3. Online payments can be sent without either side knowing the identity of the other. Select the correct answer using the code given below.

  1. 1 and 2 only
  2. 2 and 3 only
  3. 3 only
  4. 1, 2 and 3

Answer

Correct Answer

2 and 3 only

Explanation

Bitcoin transactions can be sent between any two Bitcoin addresses and can be conducted pseudonymously without either party knowing the other's real identity, making statements 2 and 3 correct. Bitcoins operate on a decentralized peer-to-peer network and are not tracked by central banks, making statement 1 incorrect.

Topics: bitcoin, cryptocurrency, digital currency, indian economy