Understanding Bitcoin: Functionality, Advantages, and Disadvantages

Compound Interest Trader
4 min readNov 19, 2023
Photo by Aleksi Räisä on Unsplash


Bitcoin, a term that has become synonymous with digital currency, has been a subject of intense discussion and analysis since its inception in 2009. Created by an anonymous entity known as Satoshi Nakamoto, Bitcoin introduced a decentralized, peer-to-peer system for financial transactions, challenging traditional banking systems. This article delves into the mechanics of Bitcoin, its advantages, disadvantages, and its implications in the world of trading.

What is Bitcoin?

Bitcoin is a digital or virtual currency, often referred to as a cryptocurrency, that operates without a central authority or government oversight. It is the first decentralized digital currency, with its transactions being recorded on a public ledger known as the blockchain.

How Does Bitcoin Work?

Blockchain Technology

The backbone of Bitcoin is blockchain technology. A blockchain is a distributed ledger that records all transactions across a network of computers. This ledger is open and accessible to anyone, ensuring transparency and security. Each transaction is verified by network nodes through cryptography and recorded in a block.



Compound Interest Trader

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