Which of the following statements about Bitcoin is/are correct? 1. I

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.

[amp_mcq option1=”1 only” option2=”1 and 2 only” option3=”2 and 3 only” option4=”1, 2 and 3″ correct=”option2″]

This question was previously asked in

UPSC CDS-1 – 2017

Statement 1 is correct; Bitcoin is a decentralized virtual currency or cryptocurrency that operates on a peer-to-peer network without a central authority like a central bank. Statement 2 is correct; Bitcoins are generated through a process called mining, which involves solving complex computational problems using powerful computer hardware. Statement 3 is incorrect; the Reserve Bank of India (RBI) has not recognized Bitcoin or any other virtual currency as legal tender in India. On the contrary, the RBI has issued warnings about the potential risks associated with trading in virtual currencies.

Bitcoin is a type of cryptocurrency that is decentralized, relies on blockchain technology for transactions, and is generated through computationally intensive ‘mining’.

Legal tender is a medium of payment recognized by a legal system to discharge a public or private debt. As of 2016 and subsequently, the RBI has maintained that virtual currencies like Bitcoin are not legal tender and carry risks, including volatility and potential use in illicit activities.

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