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. Select the correct answer using the code given below.
A
1 and 2 only
B
2 and 3 only
Correct Answer
C
3 only
D
1, 2 and 3
Explanation
Statements 2 and 3 are correct because Bitcoin operates on a peer-to-peer network where transactions occur directly between digital addresses, allowing for pseudonymity since real-world identities are not required for transfers. Statement 1 is incorrect because Bitcoin is a decentralized cryptocurrency based on blockchain technology, meaning it is intentionally designed to function without the oversight or tracking of any Central Bank. The core concept being tested is the fundamental architecture of decentralized digital currencies and their departure from traditional centralized financial systems.
Emerging TechnologiesCryptocurrency & BlockchainBitcoinsCentral Banksdecentralizedpeer-to-peeranonymityblockchain