How to Explain Blockchain To Your Parents/Girlfriend/Friend

Getting Started - The Blockchain

This article is aimed to help you explain the blockchain technology and a little bit about crypto- and virtual currencies to your parents who might be concerned about you gambling away (their) money. It is aimed to be short and to the point, to not confuse them, but give them a sense of understanding for this important.

Blockchain is the foundation of Bitcoin. Banks in the old days used a simple ledger to keep track of who owes what to who. That record - back then on paper, nowadays on computers – would be stored by the bank, which makes the ledger centralized and therefore vulnerable. The blockchain is Bitcoins ledger. Many participants form a network in which the ledger is distributed – therefore decentralized. This makes it more secure than a bank by design.

“But what gives it value? It’s not secure if it goes to zero.”

The same what gives the dollar value. Trust, that someone else will exchange goods and services for it. When the big banks were bailed out after the financial crisis 10 years ago, trust in the banking system fell and trust in Bitcoin grew. The next crash will come, and virtual currencies will gain more thrust each time that happens.

“But it could go to zero, it’s just speculation”

It’s true that its speculation at this point, since the technology is still not fully adopted and in “beta” mode. But people have said that over and over again in the past and Bitcoin prevailed so far because the entire world can participate and profit from it. Those with little access to banking, or those who are living in countries with dysfunctional banks and governments can all of a sudden set up businesses and do all those things that made the West what it is today. The implications are huge!

“I’m still not convinced”

By now you might think “screw this, they’re too old to get it”. It’s important to understand that humans adapt slowly to new technologies and ideas. Especially those who are risk averse usually look out to avoid internet get-rich-quick-schemes - and that’s good. Learning about the implications of cryptocurrencies, virtual money and digital tokens takes time and should not be forced upon somebody. You have to follow the development to gain trust in the idea. People who don’t expose themselves to new technologies won’t adapt right away unless their peers do so. This takes time.

Just ask your parents what they would like to know about crypto, and don’t be too persistent if they just don’t care. Also make sure to explain to them, that you are not going all-in on this. You are simply putting a reasonable percentage of your savings into a hedge against a market collapse and learning a little bit about the financial market on the way.

The information in this Blog is for educational purposes only and is not investment advice. I am not a financial advisor. Please do your own research before making any investment decisions. Online And Cryptocurrency investments are a volatile and high risk in nature. Don't invest more than what you can afford to lose.