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If people ask me how bitcoin works, I have found a lot of success using this explanation. Feel free to use it yourself.

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by COINS NEWS 13 Views

  1. First method is just don't do it. Don't bother. No seriously, Most of the time they don't care. They are just looking for an opportunity to sneer and make fun of you for buying magic beans. Tuipmania, blah blah blah.
  2. But if they actually are interested in how crypto works because they don't get it and want you to explain then this explanation has always worked for me. It's not perfect but it usually makes people understand why bitcoin has value without boring technical jargon:

Imagine you are tasked with creating a list. The list has to have some very special properties. Anybody can add to the list. But nobody can rearrange the list or delete an item off of it. It needs to be decentralized.

You might think to put the list on a website so that everybody has access to it. It's a good start but whoever owns the server on which the website resides could easily delete the list or alter it so this won't work. That's not decentralized.

So then you might think to distribute that website across millions of different servers with different owners. All the servers talk to each other to update the list when something is added and they all talk to each other to agree what the list is so if anybody tries to delete the list or alter it on their server, the rest of the servers will know and ignore their changes.

Great! problem solved!

But why would anyone be motivated to run one of these servers? What's in it for them? Well, you could pay them but if you ever stopped paying them you could essentially shut down the servers and delete the list. It's still centralized.

What if the program paid them in its own made up money that it made out of thin air?....

That does solve the centralization problem. But why would anybody want fake money?

Well if there is a market need for a list with these properties and the only way this service can meet that need is if people get paid in the fake money then that fake money necessarily needs to take on value.

Ok, what's the market need? What does this list do that is so valuable?

It keeps track of who has how much of the fake money...

The market need is for a decentralized currency that is fairly distributed and decentralized. Thus the fake money takes on value because there is demand for the special properties associated with it by the list it runs on. The more demand there is for this kind of currency with the inherent properties of the list, the more value it takes on.

The list is called the block chain and the currency is called bitcoin.

Anyways, that spiel has worked wonders for me. I know there is obviously so much more to say and you will be tempted to add more detail or change the metaphor to be more specific but I promise this method works on normies. Hope it helps someone.

submitted by /u/AverageLiberalJoe
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