GS Paper I — Q19
What is Cryptocurrency ? How does it affect global society ? Has it been affecting Indian society also ? (Answer in 250 words)
हिंदी में प्रश्न पढ़ें
क्रिप्टोकरेंसी क्या है ? वैश्विक समाज को यह कैसे प्रभावित करती है ? क्या यह भारतीय समाज को भी प्रभावित कर रही है ? (250 शब्दों में उत्तर दीजिए)
Model answer
Drafted with AI by UPSC Answer Check against this question's marking rubric, to the 250-word length. UPSC does not publish answers for Mains — this is one way to score well, not an official key. How we build rubrics and answers.
Cryptocurrency is a decentralised digital currency secured by cryptography and recorded on a distributed ledger (blockchain), operating peer to peer without a central bank or trusted intermediary.
Global impact It lowers the cost of cross-border remittances and offers access to the unbanked. But pseudo-anonymity aids sanctions evasion, illicit trade and terror financing, and proof-of-work mining is energy-intensive. Responses diverge: El Salvador made Bitcoin legal tender in 2021 (made voluntary under a 2025 IMF programme), China banned crypto trading and mining, and the USA enacted the GENIUS Act (2025) to regulate stablecoins.
Indian society Policy has moved from restriction to taxation. The Supreme Court (2020) set aside the RBI's 2018 banking curb; the Finance Act, 2022 taxed virtual digital assets at 30% with 1% TDS; and the PMLA was extended to crypto exchanges in 2023. Volatility has drawn urban youth into speculation, exposing retail investors to Ponzi schemes and cyber fraud, while capital flight and evasion of exchange controls threaten macroeconomic stability. India used its 2023 G20 Presidency to push a coordinated global framework, promotes UPI as a public alternative, and is piloting the e-rupee (CBDC).
How this answer will be evaluated
Framework: GS1 Paper 1
What earns full marks: Precise definition, clear global/Indian distinction, robust data, and analytical depth on societal impact.
Evaluation rubric
Each sub-part is marked on its own, against the marks and word limit printed on the paper.
- The answer Define cryptocurrency, explain its global societal impact, and assess its specific effect on Indian society. 15 marks · 250 words
explain— definition/context → points in order → small example → short close
Must cover
- Define cryptocurrency as digital asset using cryptography
- Explain global impact on financial systems and trade
- Discuss Indian context: regulation, adoption, or challenges
- Link technology to social or economic outcomes
Loses marks
- Narrating chronology of Bitcoin's creation
- Using emotive words without analytical basis
- Failing to distinguish global vs Indian impact
Earns more
- Mention blockchain technology as underlying mechanism
- Reference specific Indian regulatory stance or policy
- Provide one robust statistic on adoption or value
- Discuss intersectionality with traditional banking
Extra mark
- Name a specific Indian court judgment or policy
- Cite a specific global regulatory framework
What "Explain" is asking you to do
Make the working of something clear — what sets it off, what follows from what, and what it produces. Explain is the Commission's mechanism word: it dominates the technical papers and the “explain why” stems, where the marks sit in the causal chain and not in the label.
Structure that answers it
State what it is → the initiating condition → the chain of cause, step by step → an instance where it plays out → what the chain produces
Where marks are lost
Describing what something looks like instead of why it works that way. Naming the stages without linking them reads as description too.
Practice this exact question
Write your answer and it is marked point by point against the model answer above — what you covered, what you missed, what you got wrong.
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