How I Explained Bitcoin to My Grandma
7 Feb 2019
There’s no place like home during the holiday season. Friends, food, and nosy family members asking what you actually do for work. The older generations sometimes just can’t get their heads around complex technological topics—particularly my grandmother.
While Bitcoin has undoubtedly become more popular since its explosion in price around late 2017 (your grandma may have even seen Warren Buffet yell about it on the evening news), the currency itself actually launched in 2009. At that time, it was really difficult for most people to understand what ‘Bitcoin’ was, and truly grasp its revolutionary merits.
Today, you don’t have to be a finance enthusiast or tech expert to understand the world of digital assets like Bitcoin. Here’s how I explained Bitcoin to my grandma:
Grandma: “What in the world are Bitcoins?”
Bitcoin is a cryptocurrency. Actually, it was the world’s first cryptocurrency.
Cryptocurrencies are electronic payment mechanisms that allow just about anyone to send digital money to others across the world.
Grandma, think about when you send cash to your grandchildren for their birthdays through the mail. You need to pay a third-party service provider (postal service, UPS, FedEx, etc.) to send the envelope.
Then, when your grandchild receives the envelope—assuming it doesn’t get mixed up with all the other bills, junk mail, and holiday catalogues—they need to go to the bank and deposit the cash. This process may take about an hour per grandchild.
So, with your 10 grandchildren, this represents about 10 human hours wasted in total, and with about 80 million grandparents in the United States, that amounts to a ton of wasted time which could be better spent with friends and family…
Using Bitcoin, however, it can all be done online for a fraction of the cost.
Grandma: “Now why would I want to do that?”
Remember the economic crisis in 2008 when you and Grandpa lost half of your savings and had to downsize to that condo in Fort Lauderdale? Bitcoin was built so that this never has to happen again.
Banks use this fancy thing called “fractional reserve” meaning they can do whatever they want with a percentage of the money we give them for safekeeping. This gives banks the ability to control and manipulate our money and even our national currencies. Remember 2008…?
Bitcoin, on the other hand, is not susceptible to such third-party monetary manipulation. No single person or institution controls the bitcoin held by investors and users, and you can actually store it in your own wallet—either online, or on a piece of hardware.
Think of it like a wallet that can contain potentially billions of dollars of digital cash. You don’t even have to go to the bank to deposit what you can’t store at home.
In fact, I remember grandpa telling me you used to keep your money under the mattress. In a way, it’s similar to what you can do to protect your Bitcoin. If you really wanted, you could actually print out your Bitcoin keys and hide them under your mattress for safe keeping.
Grandma: “Well, my book club friends told me Bitcoin was only used to scam people and buy contraband.”
Back in the early days of Bitcoin, certain groups of people were using its anonymity to procure certain “illicit” goods through places like Silk Road. It was pretty much online shopping for contraband with payment rendered in Bitcoin.
Silk Road, however, was shut down by the FBI on multiple occasions—and the owner was arrested. He is currently serving a double-life sentence plus an additional 40 years in prison.
Of course, there are also the Bitcoin scams, kind of like that Nigerian prince scam you asked me about a few years ago. People will do anything to fake innocent users out of their hard-earned money (and cryptocurrency).
So, if you get an email from an unknown address saying they’re going to release lewd pictures of you if you don’t transfer them $10,000 USD worth of Bitcoin within 48 hours, please know that it is just another scam and Bitcoin is not to blame. Some people just suck.
Grandma: “So, if it’s not a scam, why isn’t everyone using it yet?”
Bitcoin can be very volatile. It’s traded on exchanges, just like how traditional stocks are traded on the New York Stock Exchange, for example. People buy and sell bitcoin 24/7, which means the prices are constantly changing. Today, your bitcoin could be worth $10,000 USD and tomorrow it could be worth $5,000 USD, so it’s always important to be wary of the markets.
If you think bitcoin may be a little too risky for you, you can always try a stablecoin alternative. Stablecoins are also cryptocurrencies, but they’re backed by $1 USD for each dollar in cryptocurrency issued.
As such, they’re more or less “immune” to price volatility and always hover around the $1 USD mark in value. If you’re curious about stablecoins, you can check out coins Tether (USDT), Paxos Standard (PAX), or TrueUSD (TUSD).
Grandma: “Well that all sounds very good, how can I buy some?”
Now that you know how to work that iPhone I got you for Christmas last year, I think you should try using the Cryptanite app to easily buy cryptocurrency for the first time.
There are so many cryptocurrencies available, and more being added all the time. Just download the app, create an account, and you can start buying cryptocurrencies in minutes.
There are even themed bundles of different cryptocurrencies available, so if you want to buy more than just Bitcoin, you can purchase a bunch of pre-sorted cryptocurrencies and diversify your holdings! With the Cryptanite app, there’s even a built-in wallet to help you safely store your newly purchased crypto.
So, next holiday, do away with that cash in the envelope—and send some Bitcoin instead!