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How to explain Bitcoin to your Grandmother?

When someone new asks you about what Bitcoin ‘actually’ is; do you find it hard to succinctly answer them without going off on a tangent?.

Posted March 29, 2019

explaining bitcoin to your grandma
explaining bitcoin to your grandma

When someone new asks you about what Bitcoin ‘actually’ is; do you find it hard to succinctly answer them without going off on a tangent?

I know that has been my experience, and I try to keep the explanation focused.  So what is the best way to explain to a beginner what Bitcoin is without getting to deep into the jargon?  Some of the more common explanations for Bitcoin and its related ideas I’ve heard are:

  • In a normal bank account; your money is reflected as a ledger in your account and when you send dollars to someone the bank deducts the total from your account and adds it to the receiving account. Bitcoin works very similar, except instead of a bank doing the sending centrally, users of the Bitcoin network (miners) complete the same task.
  • A Bitcoin wallet is like a postbox you run. So people know the address (public address) and can send letters (Bitcoin) there. However, after they have sent they can’t open it up and get the letters (Bitcoin) back. Only you as the postbox (wallet) owner have the key (private key) to unlock the post box and have access to your letters (Bitcoin).
  • Bitcoin is the financial version of e-mail. You can send money to anyone electronically with their address.
  • Bitcoin is like virtual physical cash. You can give it to someone without any middle man being involved.

The public and private key cryptography is not important for people to understand how Bitcoin is sent, just like people aren’t aware of the cryptography involved in everyday internet use such as TLS in web browsing, email and instant messaging services.

You may then be asked what is the point of digital cash if we already have it with our existing banks? This is where you can start to explain some of the philosophy around decentralization and see if it strikes a chord. Some of the older generation have a distrust of banks due to recessions and the like, this is a good point to start on to explain the potential upside of Bitcoin in the economy.

What is the easiest way you could explain Bitcoin?

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Last updated December 2, 2021

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