welcome back to explain to me like i'm
five where we're making it easy for you explaining crypto concepts in
simple terms and answering the questions that we've all been asked
by family and friends about crypto I'm Jessica Walker and on this episode we have
Kevin Murcko ceo of coin metro exchange and Scott Melker wolf of all streets both parents will be
explaining bitcoin to their kids before we start guys make sure to like the video first let's jump
right in with scott scott how does bitcoin work what i've found myself doing which is really
fun is i've started to play monopoly with my six-year-old daughter and what i did to start
explaining to her more about bitcoin was that i got rid of all the money in monopoly and made
us transact and keep a ledger of the transactions of the game so every time someone buys something
we take it off their written you know we do this written and we take it off of their ledger
if somebody uh you know hits free parking or something we add the money so we're keeping this
list of transactions when you do it with more than two people it's a lot of fun and obviously there's
challenges to it like you have to make sure that nobody's cheating adding a zero anything like that
so basically what we do is we keep our own ledger and then every 10 or 15 minutes we go in and we
make sure that the ledger is correct and i find this to be a perfect analogy for a child who can
understand the game of monopoly for what bitcoin is and how the blockchain works obviously you have
the payment records which is like a block and then you have a network of all of us sharing it which
is each of our individual ones and then every time we do a checkpoint at 10 or 15 minutes that's
sort of like a block being confirmed and the fact that we have multiple people shows that there's
no centralized authority it's decentralized and it's peer-to-peer so i've found that playing the
game of monopoly without the physical money has been the simplest way to start explaining
to my kids and her friends about bitcoin and this is where the phrase peer-to-peer really
comes in unlike a normal game of monopoly where there's one banker in charge of everything this
is known as the central authority and how the banks that we used to now really operate the way
scott plays monopoly is considered decentralized everyone is checking each other's work and also
everyone knows what the score is at any one time you can't change the school without convincing
everyone you're playing with there's a really good reason for doing so in a similar way each piece
of information that's recorded on the blockchain has an identical copy of the information and
that's pretty much set in stone it can't be changed or tampered with so it's impossible to
cheat bitcoin the people have a huge role to play with checking each other's work and also making
sure the system keeps on running they also have another role and that is to ensure new bitcoins
keep being created but how can they do this if bitcoin is this internet money that we can't
hold or keep in our wallet well new bitcoins are created by bitcoin mining and the easiest way to
think about cryptocurrency mining is to think of it as one interactive online game that you play on
your computer the prize in this game for solving puzzles is more bitcoin Kevin has explained it
in such a way even his five-year-old understands from the technical side of it it's kind of like an
easter egg hunt so you're running around you know you're you're a miner so you're trying to find
blocks that you can then decode so you're trying to find areas of the map where the easter eggs
are and you decode them and if you decode them well and you find that easter egg you get a prize
inside and obviously that prize would be bitcoin so she sees all these people interacting on
electronic devices and so understanding that the way these coins and her games are created
is that every one of those devices is constantly searching for those coins and when they find a
hit a box that they think there might be coins in they have to open that box and these boxes are
digital so you don't open them with your hands you open them with your tablet with your device your
device goes in the background and does all these great computational things and when she asked
me what computational would be i would say well that's stuff computers do and they digitally open
the box and sometimes in that box you will find bitcoin and what's bitcoin again it's money it's
those coins in your game it's how you buy things on the internet that was a really good explanation
for how you would talk to a child about it and if you're gonna say how do i do it myself well there
are a number of ways but at the at the end of the day everybody just needs a computer uh an internet
uh connection something that we largely all have and you know the the willpower and patience to to
become a minor it's really become something that's so accessible for almost anyone through various
uh you know different companies and methods but at the end of the day it's just what he said if
you're gonna explain to a kid how bitcoin is made you say it's a really complicated puzzle that only
computers are smart enough to compute and solve so you have to get a computer and you have to get
them working together to try to solve that puzzle and when you solve the puzzle you get a reward
and so at the end of the day for a child i think you know giving the analogy of hey it's just
a it's a math problem like you do in school or it's a puzzle or a game that you play and you
want to win the game and then you win bitcoin i think that's the most simple explanation so
now that we've covered blockchain technology and why it's really important for bitcoin we know how
bitcoin are made but is so important to understand why this new technology is so important
so once you understand the core features of bitcoin compared to paying on a credit card or
the cash in your pocket you will not want to look back scott i want to ask you what do you think in
general our kids see us order things on amazon and they see us use our credit cards and they see
us pay people uh through paypal so i think that that's really the bridge and they understand
that money is effectively digital already and that cryptocurrency is just a superior next
step when i was a child and i started listening to rap music and my parents would tell me how
much better the music of their generation was the songwriters were better the stories were better
they played real instruments and of course i was a dj for 20 years and a music producer so you know
i went a completely different way than my parents uh with my music and now in my 40s i already find
myself criticizing the music that my six-year-olds like and listen to because it's not what i'm
familiar with and i think that what i grew up with is better and that works across every single
medium obviously not just music it works with entertainment it works with talking about growing
up without social media and all of these different things so it kind of harkens to what Kevin said
which is that people become very comfortable with what they're used to they become comfortable
with the systems and things that they like because there's a fear that you're going to get left
behind or that something will replace it and you won't understand it and the good aspects of
bitcoin are really endless there are so many ways that it's superior to the systems that we have you
can send it faster than you can send normal money any adult knows and the child doesn't know yet but
if you try to send a wire transfer to someone in a foreign country it's going to be really expensive
they're going to it's going to take a really long time if you want to send a little bit of money
to your friend if you're five to anywhere in the world you can do that almost instantaneously with
bitcoin or a stable coin so having a kid try that i think would be a really amazing experience for
them to see that you don't need somebody to tell you where you can send your money and when you
can do it and that you shouldn't have to pay someone to be able to do that any five-year-old
can probably already see that something's more expensive than when they were three right
especially in this environment we talk about it in my house all the time well milk at the
beginning of 2020 was a dollar cheaper than milk is already in 2021.
Why is that well it's because
our money is becoming worth less bitcoin doesn't become worth less you don't need to get into the
technical reasons or deflation to explain that to a child you just say your money is becoming worth
less every year and bitcoin is not it's going up in value which means you can buy more toys and
buy more stuff now let's stop there and focus on something that scott has mentioned he's just said
that if you want to send money to another country using a bank wire or bank transfer this can
one take a long time and two it can be really expensive now this might not sound like such a big
issue but if you send a majority of the money you make each month this is a big problem and an even
bigger problem is if you don't have a bank account it makes it even harder for you to send the money
so in the united states six percent of people don't own a bank account that might not sound like
a lot but it makes up over 14 million people and in turkey that percentage is 31 so what do people
without bank accounts do when they need to send money to different places around the world well
normally they'll send money in a different way they'll go to a company and that company will
do it for them maybe they'll work abroad and need to send money to their family the issue is
the price these companies charge is really high sometimes as much as eight percent of what you're
looking to send and this is why Scotts mentioned bitcoin there is no fee to receive bitcoins and
many wants let you control how large a fee to pay when spending the cost to send bitcoin
is the same whether you send one bitcoin or 10 or just a fraction of a bitcoin anywhere in the
world and not only that it also makes it almost immediate and saves you and the person you're
sending money to time overall bitcoin gives a lot of people opportunities to help businesses
and help individuals if you found this useful i'm gonna pass the challenge on to you to share
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