UPSC CSE Prelims
Question 28
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 countries.
- Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address.
- Online payments can be sent without either side knowing the identity of the other.
Select the correct answer using the code given below.
View correct answer and explanation
Correct answer: B
Correct Option: B
Explanation: Bitcoin is a decentralised peer-to-peer network. Bitcoin addresses enable transfers without personal identification being inherently disclosed on-chain, although transaction histories are public.
Statement/Pair-wise Analysis:
Statement/Item 1: Incorrect - Central banks do not operate or centrally track Bitcoin as its governing ledger authority.
Statement/Item 2: Correct - A Bitcoin address can receive transfers from other valid addresses across the network.
Statement/Item 3: Correct - Pseudonymous transfers can occur without either party learning the other’s legal identity.
Option-wise Analysis:
A: Incorrect - includes incorrect statement/item 1; omits correct statement/item 3.
B: Correct - includes all and only the true statements/items.
C: Incorrect - omits correct statement/item 2.
D: Incorrect - includes incorrect statement/item 1.
Review Note: Bitcoin is pseudonymous rather than perfectly anonymous: public transactions and exchange KYC may permit identity tracing.