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 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:

Bitcoin is a decentralised digital currency, launched in 2009, that runs on a blockchain: a distributed ledger maintained by a network of computers rather than by any bank or government. That structure settles the three statements.

• Statement 1 is wrong. No Central Bank tracks Bitcoins. Transactions sit on a public ledger kept by network participants, and no central authority issues or controls the currency.
• Statement 2 is correct. Transfers are peer-to-peer. Anyone holding a Bitcoin address can send to or receive from any other address, with no intermediary needed.
• Statement 3 is correct. Users are identified by pseudonymous wallet addresses, not names, so the two parties need not know each other's identity. Pseudonymity is not full anonymity, since the ledger is traceable.

The core concept is cryptocurrency and decentralised ledgers. For Mains GS-III, it links to the debate on virtual currencies, money laundering and the RBI's cautionary stance. The regulatory picture has changed since 2016: the RBI's 2018 banking ban was struck down by the Supreme Court in 2020, and India later taxed virtual digital asset gains under the Finance Act 2022.

Trap: Statement 3 tempts aspirants into calling Bitcoin fully anonymous, while statement 1 is accepted because people assume every form of money is watched by a central bank.