Crypto Basics: Fun Ways to Explain Crypto to Children

Cryptocurrency is quite a complicated subject for adults and children alike. But in this world dominated by technology and digitalisation, 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 encounter it in the future. What if your children ask you about what cryptocurrency is? For instance, if everyone in the family is talking about cryptocurrency, trading, and investing, your children are the only ones to be left out of the conversation. How are you going to explain in a less complicated way or in a manner that would be easily understood? 

Here are some ways to explain Bitcoin and cryptocurrency to children. 

Bitcoin and crypto by definition. For children who have zero knowledge about cryptocurrency, defining it should be simple and easily comprehensible. Jargon and complicated terms might confuse them. Even adults get bamboozled with these terminologies when they first encounter them. The bottom line is to make it as simple as possible. Using basic English without those jargon and confusing words is the right way to do it. 

Then how? Compare it to something they are familiar with. For instance, children love to play monopoly. Cryptocurrency is like the tokens in the game. The only distinction is that this currency is digital and has no physical form. You cannot touch or see it, but it exists with value and purpose. 

See the money in your pocket? The government is responsible for distributing that money away to people. They can limit its amount and set its value. However, cryptocurrencies like Bitcoin are decentralised, meaning 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 the Dollar, Euro, Yen, Peso etc. Crypto also has various kinds like Bitcoin, Ethereum, Ripple, Tether, LiteCoin, Cardano etc. 

Who invented cryptocurrency?

In 2008, a person or a group of geniuses came up with the idea of creating a digital currency that is not controlled by the government. 

Who were they? No one really knows. The creator/s are masked under the pen name Satoshi Nakamoto. 

They named the first cryptocurrency Bitcoin. 

How is cryptocurrency acquired?

Where do you get gold from? Your children might know that it came from the ground. Just like real gold, cryptocurrency is also acquired through mining.  Miners are people around the world whose job is to acquire cryptocurrency using rigs. If gold miners use the backhoe, heavy rigs and equipment, cryptocurrency doesn’t need these materials. Instead, they use computers and devices. What these devices do is compute mathematical puzzles in exchange for tokens for every verified transaction. 

First Bitcoin purchase

In 2010, a man from Florida had made the first-ever purchase using Bitcoin. He bought 2 boxes of Papa John’s pizza for 10,000 bitcoins. The price of each Bitcoin during that year was $4. As of today, that purchase could have been worth over $100 million! Wow! 

How are cryptocurrencies used? Imagine this. If you want to sell an item, what you usually do is post a picture of the item at Amazon or Ebay. These websites serve as the medium or intermediary between you as the seller and your potential buyers. 

A few days or hours later, you were able to sell the item. However, you noticed that you did not receive the whole amount that you sell it for? For instance, 10% is deducted since you have used a website to sell it, you were charged some processing fee. 

Eliminating those charges can be easy with cryptocurrency because of its technology called the blockchain. Before we discuss blockchain further, you must know that cryptocurrency enables you to transact, send and receive cryptocurrency all around the world without the need for a middle man or banks. And the good thing is that you can be able to do it in a span of a few minutes. 

There are many ways to spend your cryptocurrency. Recently, there have been thousands of downloadable applications that you can use that store and convert the cryptocurrency. 

Your crypto can be stored in a wallet too! Just like your regular wallet, it is portable, and you can carry it anywhere you go. The only difference is that it is digital. Crypto wallets can be downloaded on your smartphone. In order to secure your digital wallet, encryption keys like a strong password are required. 

Can cryptocurrency be trusted?

Young children tend to believe things that only exist. They only trust those that they can see, touch or hold. Cryptocurrency does not match these criteria. 

However, Bitcoin is considered reliable and safe. No one can cheat its decentralised 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 that toy. Then, one day, you decided to give it to someone else. Now, that person is now the authority over that toy. And he or she can do whatever he or she wants to do regardless if he keeps it, sell it or give it away. 

Same with cryptocurrency or Bitcoin. There is no need for a third party in this deal. It’s just between you and the other person. 

Now, let us say I own a digital game account. Since it is only a virtual game, how can I be sure that the account is mine? How can I be so sure that there is no one like it? And that I am the rightful owner? What if I decided to sell my account to someone else? 

This is where the blockchain comes to the scene. Its role is to record all data and transactions, allowing the users to track the original owner. 

Trying to hack or cheat the system won’t be easy as trying to steal someone else’s online bank account. The users of cryptocurrency around the world have over a million population. It has a technology called peer-to-peer wherein every transaction made by a single person is recorded, shared and kept by all these users worldwide. 

Conclusion

The examples above are the simplest ways to explain what a cryptocurrency is too young children. You start by not giving complicated explanations or jargon. You can use comparisons to things or objects they can relate to. 

Disclaimer: This article is not intended to encourage the investment of cryptocurrency, especially to young children. Make sure that you fully explain the risks involved in the crypto world, including the high volatility that may lead to either great profit or huge losses.If you want to know more, you may visit Crypto Engine.