Economy2016
With reference to ‘Bitcoins’, sometimes seen in the news, which of the following statements is/are correct?
- Bitcoins are tracked by the Central Banks of the
- Anyone with a Bitcoin address can send and receive
- Online payments can be sent without either side
knowing the identity of the other. Select the correct answer using the code given below.
Explanation
The correct option of "2 and 3 only" is accurate because Bitcoins operate on a decentralized system known as blockchain, where transactions can be made pseudonymously. This means that while anyone can send or receive Bitcoins using a unique Bitcoin address, the identities behind those addresses remain hidden, allowing for anonymity in transactions (statement 3). However, Bitcoins are not tracked by Central Banks universally; they operate independently of traditional financial systems, meaning that statement 1 is incorrect. This decentralized nature of Bitcoin is a significant aspect in the study of digital currencies within the context of contemporary financial systems, making it relevant for examination in contexts like the UPSC Prelims.
