Question 66
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.
AOptions
BSolution
With reference to 'Bitcoins':
1. Bitcoins are tracked by the Central Banks of the countries. This statement is incorrect. Bitcoins operate on a decentralized blockchain network. Transactions are verified and recorded by a network of computers (miners) rather than by central banks or any single governmental authority. This decentralized nature is a core characteristic of cryptocurrencies, distinguishing them from traditional fiat currencies regulated by central banks.
2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address. This statement is correct. Bitcoin facilitates peer-to-peer transactions. Users can send and receive Bitcoins directly to and from each other using their unique Bitcoin addresses, without the need for intermediaries like banks.
3. Online payments can be sent without either side knowing the identity of the other. This statement is correct. While Bitcoin transactions are publicly recorded on the blockchain, the identities of the transacting parties are typically pseudonymous, represented by alphanumeric Bitcoin addresses rather than personal names or details. This provides a degree of privacy, as real-world identities are not directly linked to the addresses unless users choose to reveal them.
Therefore, statements 2 and 3 are correct.
CStrategy
For questions on emerging technologies like cryptocurrencies, understand their foundational principles such as decentralization, peer-to-peer transactions, and the nature of anonymity/pseudonymity. Distinguish these characteristics from those of traditional financial systems.
DSyllabus Analysis
This question relates to Science and Technology (Information Technology, Emerging Technologies) and aspects of the Indian Economy (Digital Economy).
EQuestion Analysis
Medium. Requires a basic understanding of how Bitcoin and cryptocurrencies function.