It’s December 25th. You’re busy heaping cranberry sauce on your plate and stealthily dodging those brussel sprouts when, as you knew it would, the conversation turns to bitcoin.
Statistically speaking, the majority of your family have probably heard of the digital currency by now – no doubt in the context of Gox, Silk Road (both 1 and 2) and pundits declaring that it’s dead, yet again, following the latest price bubble.
They might have also seen an interview with Bitcoin’s CEO, noticed that its ‘stock‘ has tumbled or read about Newsweek’s ‘unmasking‘ of Dorian Nakamoto – bitcoin’s creator who, despite his digital fortune, is apparently living a humble life in LA with his elderly mother.
For this reason, addressing the question ‘What is bitcoin?’ in 2014 is less about providing a 101 than countering the bric-a-brac of misinformation people have picked up in passing. Here are five tips to help you nail your answer so you can get back to the real issue at hand: the food.
Rule number one: know your audience.
Back in January, Nik Custodio wrote an article explaining bitcoin for a five-year-old using the concept of ‘digital apples’. It works because it was written on his audience’s terms and in a language they could understand – something that often escapes bitcoin’s evangelical ranks.
For example, your teenage cousin is more likely to understand emerging payment technologies like SnapCash and ApplePay than the octogenarians in the room. Use this to your advantage.
They might not be a goldbug or a cryptographer, but do they like Microsoft? Are they into crowdfunding? Financial inclusion? Doge? Pinpoint something that interests them and work from there.
Really, you can get as tenuous as you like. Do they listen to rap? Watch Two and a Half Men? Great, kick off with a mention of 50 “all money is money” Cent, drone-loving Snoop Dogg and BitPay backer Ashton Kutcher.
If you’re completely lost for words – or, more likely, your mouth is full – grab the nearest smartphone or tablet and queue up some videos.
Previously, We Use Coins was the go-to resource for an easy introduction to bitcoin. However, there are now a number of different options out there that give a handle on the basics.
In our rundown of the best bitcoin explainers, Vox and The Guardian came tops for addressing the protocol’s “permissionless innovation” and its ability to cut out the middleman, respectively.
Whichever you choose, a video is an easy option to get most of the heavy lifting out the way. Merry streaming.
Other comparisons – an email for money, a kind of ‘digital gold’ – can be a useful way to tap into something familiar and relatable. So Einstein’s saying goes: “If you can’t explain it simply, you don’t understand it well enough.”
Beyond metaphors, the Gartner Hype Cycle is also useful for comparing how bitcoin fits into the broader lifecycle of new technologies.
Bitcoin: it’s the next … well, anything you like really.
In a recent interview with CoinDesk, Western Union’s CIO John ‘David’ Thompson revealed he still sees bitcoin as a “solution looking for a problem to solve”.
While entrepreneurs are still searching for its ‘killer app’, on a basic level, bitcoin does fix a well-known problem in computer science: the double-spend problem – how to transfer (and not duplicate) digital assets from one person to another.
If you’ve got a patient audience, it’s worth delving into why this “legit computer science breakthrough”, as Ben Horowitz describes it, has made strides in an area that was once dismissed as impossible.
Alternatively, try ‘fixing’ something a bit less technical. This could be a personal ‘fix’ you’ve encountered (helping to split the bill at the end of a meal, for example) or something wider-reaching like, say, making finance more inclusive or cutting transaction fees for charities.
While predictions for a $10,000 bitcoin within the next year now seem a little overzealous, many investors in the digital currency space look to the future to explain why it is worth bothering with now.
It’s becoming trendy to favour the prospects of the blockchain (as well as other 2.0 projects) over bitcoin ‘the currency’. While the two are codependent and, by design, cannot separate, many commentators think the technology behind bitcoin will trump its primary monetary function to become a multi-use platform for innovation.
Most importantly, be objective – it’s an explanation, not a sales pitch. Your end-goal shouldn’t be about winning someone over or baffling them with jargon, but giving them enough information to formulate an opinion of their own.
When all is said and done, they might dismiss the viability of a volatile currency with slow user growth – fine. Just be thankful they aren’t asking about tulipmania anymore.