Cryptocurrency is a complex topic, so it can be tough to explain to someone like your mom who's not familiar with it. There are a few things you can do to make it easier.
Initial tips before we start:
- Use simple language and avoid jargon.
- Compare cryptocurrency to something she's familiar with, like gems or bull.
- Focus on the benefits of cryptocurrency, such as its security, speed, and low cost.
- Be honest about the risks of cryptocurrency, such as its volatility.
An example of how you might explain crypto to your mom:
"Mom, cryptocurrency is a new type of money that's digital and decentralized. This means that it's not controlled by any government or bank. Reasons why cryptocurrency is faster, cheaper, and more secure than traditional bank transfers.
Start with the Basics
What is money? Why do we use it? What are the different types of money? Once your mom has a good understanding of the basics, you can start to explain how cryptocurrency fits in.
Before diving into the technicalities, start by explaining the fundamental concept of cryptocurrency. Tell your mom that cryptocurrency is a form of digital or virtual money. Just like she uses physical cash to buy things, people can use cryptocurrency to make online purchases and transactions.
Blockchain is a technology that allows for secure, transparent, and tamper-proof transactions.
Decentralization
Now, you can introduce the idea of decentralization, a key concept in the world of cryptocurrency. Explain that traditional currencies, like the dollar or euro, are controlled by governments and banks. However, cryptocurrencies operate on a decentralized network called blockchain. This means no single entity, like a bank or government, has control over it. Instead, it's maintained by a network of computers, making it more transparent and resistant to manipulation.
Digital Wallets
To help your mom understand how to use cryptocurrency, introduce the concept of digital wallets. Tell her that just like she has a physical wallet to store cash and cards, she can have a digital wallet to store her cryptocurrencies. These digital wallets can be apps or software programs that she can install on her computer or smartphone.
Popular Cryptocurrencies
Mention some of the well-known cryptocurrencies, like Bitcoin, Ethereum, and so on. Compare them to different types of currency, such as the dollar, euro, and yen. Explain that Bitcoin, for example, is like the digital version of the dollar.
Transactions and Security
Explain how cryptocurrency transactions work. You can say that when people want to send cryptocurrency to someone else, they use their digital wallet to create a transaction. This transaction is recorded on the blockchain, which acts as a public ledger to keep track of all cryptocurrency transactions. Stress the security aspect by mentioning that the blockchain makes it very difficult for anyone to tamper with these transactions.
Mining
If your mom is curious, you can briefly touch on the concept of mining. Explain that mining is the process by which new cryptocurrency coins are created and transactions are verified. It's done by powerful computers that solve complex mathematical problems. Miners are rewarded with new cryptocurrency coins for their efforts.
Volatility
It's important to mention that cryptocurrencies can be very volatile. Prices can go up and down dramatically in a short period. This means that while some people have made significant profits, others have also experienced losses. Advise your mom to be cautious and not invest more than she can afford to lose.
Practical Use
Finally, highlight some of the practical uses of cryptocurrency. Mention that besides buying things online, some people invest in cryptocurrencies for the long term, hoping their value will increase. Some businesses also accept cryptocurrency as payment, making it a viable option for certain transactions.
However, cryptocurrency is also volatile, meaning that its price can fluctuate wildly. This is because cryptocurrency is still a relatively new asset class and there is a limited supply of it.
If she is interested in learning more about cryptocurrency, you can direct her to some reputable resources, such as the websites of Bitcoin.org or Ethereum.org. You can also offer to help her set up a cryptocurrency wallet and make her first purchase.
If I have more time, tell her in detailed how it works
Once it’s stored in your digital wallet. What we can all do is the transactional address. This is what they called “Blockchain” technology which is different that describes all the recorded transactions into time-stamped blocks.
She can use a peer-to-peer transaction to receive and pay payments. And the good news is you’re not limited because of the decentralized technology.
Did you know that there are websites that accept crypto payments already? Sites like AT&T, and Microsoft. And Shopify and Home Depot are the first ones who’s accepting bitcoin as payment.
Now you may withdraw some cash using a crypto ATM that is accessible in some countries in exchange for cash. You read it right, some countries have a crypto ATM. Countries such as Canada, the United Kingdom, Switzerland, and more.
Two Types of Crypto Wallet
Software: It’s online crypto storage that is protected by private keys.
Hardware: Unlike software, hardware storage of wallets rely on can be used offline through electronic devices. Based on research this is more secure compared to software.
Why many people are interested in cryptocurrency?
Let me tell you Mom a short story about the eldest of all crypto, the very first created cryptocurrency which is Bitcoin. A lot of people regret that they did not invest too early in Bitcoin. Did you know that way back in 2017 when it reached its first highest peak? Yes, it reaches $19,700. It was owned and founded by a man named Satoshi Nakamoto in 2009. Yes, one reason is regrets and many people see a big potential in crypto.
Mom, have you heard about the Bitcoin story of who uses it to buy some pizza? Imagine if you have 10 bitcoin and you hold it for 3 years from 2014. Can you do the math to check how much is it right now? Yeah, they said that long-term cryptocurrency holders will get the highest profit, like what happened to Bitcoin holders. They said that crypto is the future which they are referring exactly to bitcoin..
Disadvantages
Scams and fraud: This could be the most skeptical reason why others don’t want to invest in crypto because they heard a very dramatic story of someone getting scammed in a crypto token in which they invest. Make sure you know the basics and risk management in cryptocurrencies and trading to avoid getting scams easily. Keep in mind to keep your private keys in a more secure place.
You need to be a bit techie: You need to be at least computer literate. Know how to use software and log in.
Not allowed in all countries: From November 2021, there are 42 countries that implicit ban of using cryptocurrency.
High risk: You can lose large or all of your investment because of just one mistake. Some of these scenarios are investing in a coin that is a scam, transferring it to the wrong wallet address, or losing from futures trading.
Advantages
High reward: This is what most people are convinced to invest in crypto. You can double or triple your investment here. And you can hear stories that 10X the value of crypto and even more than that.
Stay anonymous: Yes, technically it was designed so one can see who spending it or what you’re spending for, although all transactions associated with a wallet address are still visible.
Skip the boundaries: As long as you can go online you can have and use your crypto everywhere you want as long the country you live or stay in allows it. Anyone can use it as long as they have your access and you allow them.
Security: Distributed ledgers are more secure compared to others because it’s difficult to hack since there’s no one centralized party in control.
Fast transactions with the lowest fees: Cryptocurrency exchanges do charge very low fees for you to buy, sell, and transfer crypto compared to other ways to move money across borders and many people who use crypto will agree that the transactions are much faster. (AKA Gas fees)
What to do if your mom asks where she could start?
You may suggest that she can go to cryptocurrency exchanging sites to buy, hold, or sell crypto. All you need to do is follow the guidelines of the ex-changers you choose like:
From there she can start investing, buying, trading, and holding the top 10–100 cryptos of all time where you can enjoy the profit you win. Just make sure to do your research first for each of them before you invest. Two things that you might consider like their website and the news about that crypto.
Or she can use a crypto mining technology where you can get and collect crypto depending on the mining technology that you choose, the high-end your crypto miner is the higher you can get. Using this technology, you can own and collect cryptos like ETH or Bitcoin.
Don't forget to advise her to do deep research on any cryptocurrencies that you want to invest in.
Conclusion
Explaining cryptocurrency to your mom doesn't have to be daunting. Start with the basics, use simple analogies, and focus on the concepts of decentralization, digital wallets, and blockchain technology. Emphasize the importance of security and the potential for volatility.
With these key points in mind, your mom will have a clearer understanding of what cryptocurrency is and how it works in the digital world. Would give it a try the next time you talk to your mom?
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