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Economy2016
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
  2. Anyone with a Bitcoin address can send and receive
  3. 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.

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