Bitcoin has reached skyrocketing popularity recently. TV talks about it emphasizing on the cryptocurrency rate, Internet bloggers dedicate articles to this digital currency, and business publications shed light on its nature. However, bitcoin remains a mystery for some of us.
Adults tend to show a skeptic attitude towards the phenomenon which roots are not clear at all. Crypto industry is one of the most complicated topics our parents and grandparents face.
What is more, not all young people have a notion of bitcoin notwithstanding the continuous Internet access. So, how to explain the notion of bitcoin in layman’s terms?
Steps to simply and quickly throw light on bitcoin
1. Take physical money for a basic notion
We all understand what physical money is. It can be carried in a wallet and then exchanged for any kind of products and services. Even small children understand it.
Everybody knows that money is tangible and can be brought to the shop so it has value.
2. Show similarities with online banking and cards
In fact, the majority of our transactions is conducted by means of e-money. It can be seen on the webpage of your online banking account or on an ATM’ display. Where is e-cash stored? It’s not like a wallet with e-money you can withdraw, give somebody of pay with.
As a matter of fact, all our electronic money is stored in IT systems of commercial banks.
3. We already use e-cash
E-cash is only a number on a bank’s computer attached to your account id.
4. Banks are a chain of intermediaries
Banks serve intermediaries that manage an account with e-money. Therefore, web page by carrying out an e-payment, we in fact allow a bank to conduct it. Then, there appears a record in a bank’s system claiming it does not deal with your id money anymore, webpage and banking accounts of a third party can now be connected to a receiver’s account.
To put it simply, we often buy or pay for something not knowing a receiver and in fact send them anything. It’s a bank that is responsible for the whole process charging relevant commission.
- Bitcoin eliminates intermediaries
Many people even earn on bitcoin by buying it cheaper and then selling for a higher price.
The notion of mining
A logical question may cross the mind: where to find bitcoins? It’s hard to explain that money can be mined, not made. However, try to liken this process to mining of high-valued minerals. The nuance is that here you need a powerful PC, not a shovel or a pickaxe.