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

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Q: 41 (IAS/2016)
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.

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,133,34,11,133,11,12

keywords: 

{'bitcoins': [0, 0, 0, 1], 'bitcoin address': [0, 0, 0, 1], 'central banks': [0, 0, 0, 1], 'online payments': [0, 0, 0, 2], 'countries': [1, 0, 2, 6]}

The correct answer is Option 2: 2 and 3 only.

Explanation:

1. Bitcoins are tracked by the Central Banks of the countries - This statement is incorrect. Bitcoins are not tracked by central banks as they are decentralized and operate on a peer-to-peer network. Bitcoin transactions are recorded on a public ledger called the blockchain, which is maintained by a network of computers around the world.

2. Anyone with a Bitcoin address can send and receive Bitcoins from anyone else with a Bitcoin address - This statement is correct. Bitcoin is a digital currency that allows for peer-to-peer transactions without the need for a middleman such as a bank. To send or receive Bitcoin, all you need is a Bitcoin address, which is a string of letters and numbers that functions like an email address.

3. Online payments can be sent without either side knowing the identity of the other - This statement is also correct. Bitcoin transactions are pseudonymous, meaning that while transactions are recorded on the blockchain, the identities of the individuals involved are not directly linked to their Bitcoin addresses. However, it is important to note that Bitcoin transactions are not completely anonymous, as it is possible to trace transactions through blockchain analysis and other methods.

It is worth mentioning that central banks do not track Bitcoin transactions, but some countries have implemented regulations around the use of Bitcoin and other cryptocurrencies. For example, in the United States, the Financial Crimes Enforcement Network (FinCEN) requires certain businesses dealing with cryptocurrencies to comply with anti-money laundering (AML) and know-your-customer (KYC) regulations.

In summary, anyone with a Bitcoin address can send and receive Bitcoin, and online payments can be sent without revealing the identities of the individuals involved, making statements 2 and 3 correct. Statement 1 is incorrect, as central banks do not track Bitcoin transactions.