Crypto has been in the news a lot lately. By now, it’s most likely to be discussed at the dinner table. Here’s how you can get started.
Discussing digital currency with family usually goes one of two ways. Either they don’t understand it, or they’re skeptical about its touted advantages. Here are some common concerns that your peers may have and practical ways to communicate your point effectively.
Concern one: Crypto isn’t real money
This is one we all hear a lot. “But it’s not real money. It’s not backed by anyone”. It’s probably best to stick to the basics first. Clouding your explanation with multiple coins might increase confusion. For the purpose of clearly describing crypto, pick Bitcoin. It can be used to buy and sell goods because people believe in its value, similar to the dollar.
If that’s not enough, you can always add that Bitcoin has divisibility, durability, transferability and is standardized. If they still don’t understand how money can be digital, you could remind them that debit and credit cards are digital.
Lastly, if you need some added credibility, you could tell them that the Central Bank of Canada released a white paper back in 2017 outlining their research for creating a central bank digital currency (CBDC). Discussions around digital currency have been making the rounds for a few years now, and Canada is moving forward on the regulatory pipeline.
Concern two: Security on the blockchain
The security of the blockchain is one of its biggest selling points, but can also be one of the hardest concepts to articulate. When explaining blockchain security, it’s best to stay away from jargon like “cryptographic hash functions” and instead keep it simple.
When in doubt, use a real-world example.
If you need some money, your parents could send you some digital currency (crypto). The amount they send is debited from their account and credited to your account, and the transaction is stored in the currency’s ledger. The ledger cannot be altered because many people across the whole network have a copy of the ledger.
The first half of the example sounds like a simple e-transfer. The blockchain comes in the second half – the ledger transaction record that can never be altered. If they’re not getting the ledger part, position it as a spread-out traditional database.
A traditional database is like a single house, full of valuables. Once a thief enters that house, they can get the goods inside it. In a blockchain world, there is only one valuable item per house. Thus, the thief would have to break into every house in the entire neighbourhood to steal all the valuables. Add in that each house has its own unique security, and it makes stealing nearly impossible to accomplish.
If they still do not believe that crypto is secure, remind them the Bitcoin ledger has never been successfully hacked since it started in 2009. You could also mention that attempted hacks actually make digital currencies stronger.
If heads are nodding in understanding, you can add that the information stored on the ledger is not limited to just financial transactions. The ledger can store multiple types of data, like car ownership or tracking a product around the world.
Concern three: Crypto is in a bubble
Congratulations if you’ve made it this far, you’re doing well. The last thing you’re probably going to hear is “isn’t this a bubble? It’s too volatile”. This is a fair point, cryptocurrencies have seen its share of ups and downs, and when the prices sky-rocket, it brings back memories of many notorious ‘bubbles’.
At this stage, no one can predict where the currency’s price may swing. What is important is not to focus on the price of Bitcoin, but instead on how the blockchain can change the world.
Tell them about coins like Stellar Lumens, that are making it easier for people to send remittances to underdeveloped countries. Or talk about how Ethereum was developed to run applications on the blockchain.
What you can say instead
The internet is a great way to explain that the hype behind digital currency is actually just a sign of adoption.
In the early 90s, the internet became a household word. The dot com craze created a big buzz in the market. Today many of these early dot com companies behind all this buzz do not exist, but this doesn’t mean the internet was a failure. The internet has had a massive effect on our lives.
Digital currencies are having a moment, and the hype is palpable, but we are also at a moment of mass adoption. It is clear the blockchain and digital currencies will have a positive impact on our lives in ways only the future can tell.
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