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 this video with family or friends or anyone that
might find it useful i'm sure there are definitely questions that you still want answered so share
your thoughts in the comments and also you can ask Alex in the description box below if you
haven't already make sure to like the video and subscribe to not miss future videos like this