Bitcoin and Grandpa - can you describe it easily enough?

I've heard that if you can't explain it to a child, then you don't really understand it. Well, when it comes to computers and all things technological replace "child" with "grandpa".

This may not be true much longer, though. Technology worker numbers grew rapidly during the 1980s and exploded onto the scene in the 1990s. Right now in 2018, someone who was a hot shot 20-year-old programmer in 1980 is 58. In another ten years we will have plenty of grandpas who are perfectly familiar with technology. Maybe they won't know the latest app (or whatever there is in 2028) but they'll be likely to have a firm grasp of tech.

But for the moment, we still have a lot of grandparent-aged people who aren't familiar with technology beyond basic typing, clicking, and tapping.

So let's go nuts! Let's explain BITCOIN to grandpa!

And in my theme of convenient and easy technology, let's make the explanation clear for even the barely technical grandpa.

I had a great conversation a few weeks ago where I explained Bitcoin to an older man who is reasonably technical. Definitely not a programmer or network engineer, but he's not completely clueless either. This was a good test for my mantra of technology and privacy being made easy and simple.

How did I do?

I think I managed to eventually get the concepts across, and while he will never say "HODL!", he has at least a basic understanding and was accurately rewording descriptions of how cryptocurrencies work.

The key word in the above sentence is "eventually."

I started out the explanation with poor communication. He had patience with me. I eventually improved my explanations and we found a way to explain things in a way that made sense for him.

This is a challenge for anyone who wants to explain highly specialized things. Bitcoin is very, very specialized. It's in the news and so newcomers want to know about it, but many don't have much familiarity with the basic concepts necessary to discuss the topic.

Problem.

So, you want to explain to your grandma who has trouble clicking a mouse what Bitcoin is? Or your football-playing nephew who can Snapchat like a boss but hasn't the foggiest clue about cryptocurrencies? Here are some explanations that helped get it across for me.

Hopefully they'll help you.

Bitcoin is like a shared spreadsheet (because my guy is familiar with spreadsheets) to keep track of transactions, like bank transactions. The software that keeps track of everything is spread across hundreds of millions of computers around the world.

There is a reward for helping to run the software - Bitcoins. These get added to your 'account' in the shared spreadsheet. The software doesn't hand out the coins to everyone; instead it hands them out in small chunks to the computer that manages to solve a really hard type of randomized math problem. Everyone running the software wants to get the Bitcoin prize, so they all race to solve the problems.

The valuable part of the software is that no one can change old records without also changing every single record that comes after it at the same time. Each new math problem includes some values from the transactions that happened right before. To change any of the records, you have to solve the really hard math problem for it and every spreadsheet update that has happened since. After just a few updates it becomes impossible, even for all the fastest supercomputers in the world working together, to solve all those math problems.

So, you can be 100% certain that a record can't be changed in the past.

Anyone can make an 'account' on Bitcoin even if you don't help run the software, though. You can pay someone dollars (or euros, or pesos, or whatever) to send some of their Bitcoins to your account, and once you have some Bitcoins in your account, you can send them on to other people or businesses if they have an account. Once the Bitcoins are sent, no one can take them back - not you, not a bank, not a government, not even the people running the Bitcoin software.

The only way to move your Bitcoins around is if you use your Bitcoin account password. If you hear about thefts of Bitcoin, it's because the thieves managed to steal the passwords.

If you use Bitcoin to pay someone on Amazon or Ebay (for example), the seller can't claim you didn't pay - you can point to the transaction on Bitcoin that no one can fake or change and completely prove you made the payment. And because the bitcoin network is available everywhere the Internet is available, you can pay someone on the opposite side of the world as easily as you can someone across the room.

Lots of other people have taken the Bitcoin computer code and tweaked it to make their own versions of Bitcoin - Ethereum, Litecoin, Monero, Dogecoin, and thousands more. They all make tweaks that they think will make things better or make it better for some particular purpose. Some people also make these other types of coins as scams - they advertise that they've made a brand new, super-awesome Coin and they get people to buy in, and then they take the money and abandon the software.

All these Coins, including Bitcoin, are very new and so lots of people are still figuring out how valuable they are, how they interact with laws and banking, and how useful they are for what purposes. This makes the price on these coins jump all over the place. People get really excited about a Coin, lots of people want to get that type of Coin, and so the price goes WAY up, and then people start to worry that it's not actually worth that much and they start to sell, and then other people freak out because the price is starting to drop, so they sell too, and it becomes a chain reaction of people selling, and so the price drops really quickly. This happens to stocks and bonds too, but because Bitcoins are so new and hard to accurately guage, the jumps and falls are a lot bigger and faster.

So, that's a summary of the explanation that eventually made sense to him and the questions he had.

Maybe it makes sense to you if you're brand new to the whole concept of cryptocurrencies. Maybe it will help you communicate to other people about this crazy world of Bitcoins.