Cryptocurrency is quite a complicated subject for both adults and children. But in this world dominated by technology and digitization, it is something that everyone should have a basic knowledge of. Although you may not want to get involved with this digital currency, you may come across it in the future. What if your kids asked you what cryptocurrency is? For example, if everyone in the family is talking about cryptocurrency, trading, and investing, your kids are the only ones left out of the conversation. How are you going to explain in a less complicated way or in a way that would be easily understandable?
ContentsWho Invented Cryptocurrency?How Is Cryptocurrency Acquired?First Time Buying BitcoinCan Cryptocurrency Be Trusted?ConclusionHere are some ways to explain Bitcoin and cryptocurrency to kids.
Bitcoin and crypto by definition. For children who have no knowledge of cryptocurrency, defining it should be simple and easily understood. Jargon and complicated terms could confuse them. Even adults are confused with these terminologies when they first encounter them. The main thing is to make it as simple as possible. Using basic English without that confusing jargon and words is the right way to do it.
Then how? Compare it to something they know. For example, children love to play monopoly. Cryptocurrency is like tokens in gambling. The only distinction is that this currency is digital and has no physical form. You cannot touch it or see it, but it exists with value and purpose.
Do you see the money in your pocket? The government is responsible for distributing this money to the people. They can limit its amount and fix its value. However, cryptocurrencies like Bitcoin are decentralized, which means that the government is not responsible for issuing this currency. Only the people who use them and are willing to pay for them determine their value.
Remember that currencies come in different forms like dollar, euro, yen, peso, etc. Crypto also has different types like Bitcoin, Ethereum, Ripple, Tether, LiteCoin, Cardano, etc.
In 2008, a person or a group of geniuses came up with the idea of creating a digital currency that was not controlled by the government.
Who were they? Nobody really knows. The creator(s) are masked under the pen name Satoshi Nakamoto.
They named the first cryptocurrency Bitcoin.
Where do you get gold from? Your kids may know it comes from the ground. Just like real gold, cryptocurrency is also acquired through mining. Miners are people all over the world whose job it is to acquire cryptocurrency using platforms. If the gold miners use the backhoe, heavy rigs and equipment, the cryptocurrency does not need these materials. Instead, they use computers and devices. These devices calculate mathematical puzzles in exchange for tokens for each verified transaction.
In 2010, a Florida man made the first purchase with Bitcoin. He bought 2 boxes of Papa John's pizza for 10,000 bitcoins. The price of each bitcoin during that year was $4. By now, this purchase could have been worth more than $100 million! wow!
How are cryptocurrencies used? Imagine that. If you want to sell an item, you usually post a picture of the item on Amazon or Ebay. These websites serve as a medium or intermediary between you as a seller and your potential buyers.
A few days or hours later, you were able to sell the item. However, did you notice that you didn't receive the full amount you sold it for? For example, 10% is deducted since you used a website to sell it, you were charged a processing fee.
Eliminating these fees can be easy with cryptocurrency due to its technology called blockchain. Before discussing blockchain further, you should know that cryptocurrency allows you to transact, send and receive cryptocurrency anywhere in the world without the need for any middleman or banks. And the good thing is that you can do it in minutes.
There are many ways to spend your cryptocurrency. Recently, there have been thousands of downloadable apps that you can use to store and convert cryptocurrency.
Your crypto can also be stored in a wallet! Just like your usual wallet, it is portable and you can carry it wherever you go. The only difference is that it is digital. Crypto wallets can be downloaded to your smartphone. In order to secure your digital wallet, encryption keys like a strong password are required.
Young children tend to believe things that only exist. They only trust those they can see, touch or hold. Cryptocurrency does not fit these criteria.
However, Bitcoin is considered reliable and safe. No one can cheat its decentralized system, unlike our regular currency. This is because of blockchain technology.
Suppose you have a toy. You are the owner and no one questions your authority over this toy. Then one day you decided to give it to someone else. Now this person is now the authority on this toy. And he or she can do whatever he or she wants to do, whether he or she keeps it, sells it, or gives it away.
Same thing with cryptocurrency or Bitcoin. There is no need for a third party in this agreement. It's just between you and the other person.
Now let's say I have a digital game account. Since this is only a virtual game, how can I be sure the account is mine? How can I be so sure there's no one like that? And that I am the rightful owner? What if I decide to sell my account to someone else?
This is where blockchain comes into play. Its role is to record all data and transactions, allowing users to track the original owner.
Trying to hack or cheat the system won't be as easy as trying to steal someone else's online banking account. Cryptocurrency users in the world number more than one million. It has a technology called peer-to-peer in which every transaction made by a single person is recorded, shared and kept by all these users in the world.
The examples above are the easiest ways to explain what a cryptocurrency is to children who are too young. You start by not giving complicated explanations or jargon. You can use comparisons with things or objects they can relate to.
Disclaimer:This article is not intended to encourage investment in cryptocurrency, especially for young children. Be sure to fully explain the risks involved in the crypto world, including the high volatility that can result in big profits or huge losses. If you want to know more, you can visit Encryption Engine.
