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 t

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Q: 73 (CDS-I/2017)

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.

question_subject: 

Economics

question_exam: 

CDS-I

stats: 

0,42,52,6,69,11,8

keywords: 

{'bitcoin': [0, 0, 0, 1], 'legal tender': [1, 0, 0, 2], 'virtual currency': [0, 0, 0, 1], 'reserve bank': [1, 0, 3, 4], 'india': [8, 1, 7, 13]}

The correct answer is option 2, which states that statement 1 and statement 2 are correct.

Statement 1 is correct as Bitcoin is indeed a decentralized virtual currency. This means that it is not controlled by any central authority such as a government or a financial institution. Instead, it operates on a peer-to-peer network of computers, where transactions are verified and recorded by a distributed network of nodes.

Statement 2 is correct as Bitcoin is generated through complex computer software systems, specifically through a process called mining. Miners use powerful computers to solve complex mathematical problems, and when they successfully solve a problem, they are rewarded with new bitcoins.

However, statement 3 is incorrect. The Reserve Bank of India (RBI) has not recognized Bitcoin as a legal tender. In fact, the RBI issued a statement in 2018 cautioning users, holders, and traders of virtual currencies, including Bitcoin, about the potential risks involved.

In summary, while statement 1 and statement 2 are correct, statement 3 is incorrect.