Bitcoins Cryptocurrency
Question
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.
Options
1 and 2 only
2 and 3 only
3 only
1, 2 and 3
Explanation
Statement 1 is incorrect—Bitcoins are NOT tracked or regulated by Central Banks. Bitcoin operates on a decentralized blockchain network independent of government or central bank control. This is a fundamental characteristic of cryptocurrencies. Statement 2 is correct—Bitcoin's peer-to-peer architecture allows anyone with a Bitcoin address to send and receive bitcoins directly from anyone else with a Bitcoin address without intermediaries. Statement 3 is correct—Bitcoin transactions can be conducted with pseudonymity, where the identity of the parties involved may not be directly revealed, though transactions are recorded on the public blockchain ledger. This provides a degree of anonymity in online payments. > Bitcoin: Decentralized, P2P transfers, pseudonymous—NOT Central Bank tracked. Answer: (b).
Question details
Year
2016
Paper
GS Paper 1
Question
Q66
Subject
Economy
Sub-topic
Digital Currency and Fintech
Type
Statement-based
Difficulty
Medium
Nature
Current-affairs-linked
Source hint
Current Affairs 2015-2016
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