Explanation
- A
1 and 2 only
Statement 1 claims central banks track Bitcoins, and statement 2 says anyone with an address can send and receive. Statement 2 is true of the open Bitcoin network, but statement 1 is not: Bitcoin is a decentralised ledger not issued or routinely tracked as a liability of a central bank. 1 and 2 only is not the key.
- B
2 and 3 only
Anyone with a Bitcoin address can transact with any other address on the network, and payments can be sent without either side knowing the legal identity of the other (pseudonymity). Central banks do not track Bitcoins as they track their own currency. Statements 2 and 3 are correct; 1 is not. That is the official key.
- C
3 only
Statement 3 alone (online payments without knowing identity) is true but incomplete, because peer-to-peer addressing in statement 2 is also correct. 3 only is not the key.
- D
1, 2 and 3
All three would require central-bank tracking to be true. It is not, so this option is wrong.
Summary. Official key is (b) 2 and 3 only. Bitcoin is a decentralised cryptocurrency running on a public blockchain. Addresses can send and receive without a bank intermediary, and counterparties need not know real-world identities, though the ledger itself is public. Central banks do not operate or systematically ‘track’ Bitcoin as they do fiat. Statement 1 is the false claim. AML rules may later attach to exchanges, but that does not make statement 1 correct.
Same topic · past papers
UPSC has asked this before
These previous-year questions sit on the same topic. Open one to practise the earlier ask.