With reference to ‘Bitcoins’, sometimes seen in the news, which of the following statement(s) 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 codes given below.

[UPSC Civil Services Exam – 2016 Prelims]

(a) 1 and 2 only

(b) 2 and 3 only

(c) 3 only

(d) 1, 2 and 3

Answer: (b)        

Explanation:

• The Bitcoin system is peer-to-peer and transactions take place between users directly.
• There is no involvement of any intermediary.
• So, it can’t be tracked by the Central bank or any intermediary. Hence statement 1 is incorrect.
• Bitcoins can be sent directly to anyone, anywhere in the world. Hence statement 2 is correct.
• The transaction can be done without revealing the identity. Hence statement 3 is correct.