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Q73 (CDS-I/2017) Science & Technology › ICT, AI, Cybersecurity & Emerging Tech › Blockchain and Web3 Answer Verified

Which of the following statements about Bitcoin is/are correct? 1. It is a decentralized virtual currency. 2. It is generated through complex computer software systems. 3. The Reserve Bank of India recognized it as a legal tender in January 2016. Select the correct answer using the code given below.

Result
Your answer: —  Â·  Correct: B
Explanation

Bitcoin is a decentralized virtual currency that operates without a central agency to guarantee its value [2]. It is generated through a process known as mining, which involves using specialized computer hardware and software systems to solve complex mathematical algorithms that validate transactions on a blockchain network. Regarding its legal status in India, the Reserve Bank of India (RBI) has consistently cautioned users against virtual currencies and has never recognized Bitcoin as legal tender [4]. In fact, the RBI issued a circular in 2018 banning regulated entities from dealing in cryptocurrencies, a move later struck down by the Supreme Court in 2020 on the grounds of proportionality. However, the government and RBI maintain that only the e-Rupee (CBDC) is a digital legal tender, while Bitcoin remains an unregulated asset [3]. Therefore, statements 1 and 2 are correct, while statement 3 is incorrect.

Sources

  1. [2] Indian Polity, M. Laxmikanth(7th ed.) > Chapter 90: Landmark Judgements and Their Impact > INTERNET AND MOBILE ASSOCIATION OF INDIA CASE (2020) > p. 644
  2. [4] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > What are Crypto currencies? > p. 77
  3. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 7: Money and Banking > CRYPTOCURRENCIES > p. 160
  4. [3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 2: Money and Banking- Part I > What is Central Bank Digital Currencies (e-Rupee)? > p. 78
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