Web 3.0: A new wave of revolution circulating on the internet. It’s all about bitcoins, blockchain, and cryptocurrencies. Every day, we hear tons of stories related to these topics, yet most of us are like, “what the heck is this?”
The other day, I had a small family gathering at home, the first time after the pandemic, and guess what, everyone was talking about buying, investing, and making profits from cryptocurrencies. The only age group who felt left out from the conversation were the kids (my nephews — one seven-year-old and the other eight-year-old) and my grandparents. They’re like, “what’re you guys talking about?”
I could tell from their faces that as much as they wanted to learn about this latest technology, the jargon and heavy words associated with it confused them and made them want to give up.
I know that feeling because when I first started learning about cryptocurrencies and blockchain in 2017, I was bamboozled by the terms — decentralized ledgers, cryptography, blocks, etc. So I can understand how difficult it would be for kids, grandparents, or anyone with zero knowledge about cryptocurrencies.
So, here’s how I explained to them the concept of cryptocurrencies in simple English without using jargon or confusing words.
If you can’t explain it simply, you don’t understand it well enough.~Albert Einstein
What Are Cryptocurrencies
Cryptocurrencies are just like money tokens in monopoly, but the difference is they’re digital. That means you can see them, use them, but you can’t touch them, unlike those physical tokens/currency(bills or coins).
Also, they don’t have a “fixed value” set by law. Their worth is decided by what people are willing to pay for them.
Here are a few factors that influence the value of any cryptocurrency.
- The demand and supply of bitcoin.
Higher the demand, lower the supply = higher value of the bitcoin and vice versa.
- The cost of producing a bitcoin through the mining process.
- The number of (other) competing cryptocurrencies.
- The ownership of those Bitcoins is unevenly distributed. Some Bitcoin holders have vast hoards of the currency in their “wallets” (digital storage) compared to others. To understand this, consider a river that you want to redirect. If you have few wood planks, you can’t do it due to a large amount of water. But if you have more wood or concrete, you can change the river's course (i.e., market ).
Just the way we have different currencies like Dollar, Euros, Yen, etc., there’re different kinds of cryptocurrencies like Bitcoin, Ethereum, Ripple, Litecoin, Cardano, and Bitcoin Cash.
Why and Where Should You Use Cryptocurrencies
Picture this. You want to sell your lawnmower. So you click a picture and put an advertisement on any eCommerce website like Amazon or eBay. These websites act as an intermediate between you and a potential buyer.
Luckily you’re able to sell the lawnmower quickly, but you receive 10 percent less money than you actually charged. So, where did this money vanish?
Website charges, processing charges, or, say, Amazon deducts these fees for being the buyer-seller matchmaker.
If you want to eliminate these charges, there’s a new technology called the blockchain. Before we start discussing blockchain, know that cryptocurrency allows you to send money to anyone anywhere in the world without passing through the gates of banks or undergoing any (third party) processing fees. And the best part is, the receiver receives money in a matter of minutes.
There’s another good news! You can use bitcoins to buy your daily stuff. Below are some of the retailers that accept bitcoin in exchange for products:
- Home Depot
- Whole Foods
But the question is, how can you get a bitcoin to spend?
There’re many ways to get a bitcoin, but for starters, it’s easy.
The answer is Lolli!
It is an authorized, legit, and safe app that lets you get free Bitcoin. Did I say free bitcoin?
The answer is yes and no.
If you use your credit card to pay your bills at their 500+ partnered stores (Walmart, Gap, Groupon, Sephora, Bestbuy, Old Navy, etc.) Lolli gives you a choice to get (a percentage of) bitcoin as a part of their reward program.
There’s no trap.
As soon as Lolli gets paid by the merchant, they send you an equivalent bitcoin in your Lolli wallet, which you can also convert and withdraw after reaching a minimum balance of $15.
Can You Trust Cryptocurrencies
I know elderly people and kids like to believe only in what they see, touch and feel. Cryptocurrencies tick none of these boxes.
But they’re safe and reliable. No one can steal it from you or cheat you, unlike a conventional currency. The process is as transparent as glass.
Let me explain it with an example.
Suppose I have a beautiful painting. In simple English, I am the owner of that painting. You trust me because I have proof of ownership. If I give it to you, I no longer have this painting. You also don’t have to worry that I’ll give the painting to someone else because I don't have it. Now, since you have it, you have complete authority over what to do with that painting. You can sell it, keep it or use it.
It’s a simple transaction. No third person/party is involved in this deal.
Now, let’s say I have a digital painting.
Since it’s digital, how can you be sure that the painting is mine?
How can you be sure that I have not made multiple copies to send them to others?
How can you be sure that it's unique and I have not put it online for others to download?
How can you be sure that you’re the only one with this unique copy?
How can you be sure that you’re the sole owner of that digital painting and no one else is?
This is where blockchain comes into play.
It’s like a record-keeping book that allows you to track all the previous buyers/owners of the painting.
Now, you might have some questions:
- Can’t it be hacked?
- Can’t someone manipulate it?
- Won’t I be charged for the maintenance/management of this record-keeping?
- Can’t the transaction be as simple as the physical painting?
Well, the answer to all these questions is not as complicated as it looks.
Anyone who conducts a cryptocurrency transaction is connected with the system that by default makes them a record-keeper. Yes, it’s correct; everyone on the system keeps the record instead of one traditional regulatory authority like banks.
That means whenever a transaction is being carried out, all the users get notified of that deal in their account. That means I can’t cheat; I can’t double-cross. I can’t sell the painting to anyone else except you because you have all the data beforehand telling you everything about the digital painting.
When I say everything, I mean everything — the number of digital paintings, date when it was last accessed, who bought it, where it was purchased, etc.
When we conduct an exchange, we both know that the painting has left me and reached you, which everyone on the system verifies.
So, there’s no “one” user, government, or third party that can control/manipulate our transaction in any way or charges any fee.
The above explanation is the simplest way to explain the concept of cryptocurrency to the younger generation. They deserve to know what their future is because bitcoins and cryptocurrencies are here to stay.
Cryptocurrency has boldly declared its arrival in the last decade by changing the financial landscape. The rising number of bitcoin ATMs and increasing popularity is an encouraging sign that cryptocurrencies are disrupting the mainstream currencies.
So, the next time a newbie or an eight-year-old asks you about cryptocurrency, don’t make it look like a rocket science topic.
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