Granny’s Bitcoin Cheat Sheet!

The article by Crypto Times is worth sharing  with all the bitcoin/cryptocurrency  enthusiasts.

Enjoy!

 

Disclaimer: This is not financial advice …just the writer’s opinions!

If you’ve ever tried to explain “this internet thing” to your grandma, you know how hard it is to put complex ideas into simple words. Since we all feel a bit like old grandpa Joe when it comes to understanding cryptocurrencies, The Crypto Times decided to help.

I proudly present…Granny’s Bitcoin Cheat Sheet! A glossary of granny approved explanations for crypto terms. Use this to teach what you learn about Bitcoin and cryptocurrencies to your friends. Better yet, do it with words any five year-old, and of course your grandma, would understand.

There’s even a fancy, downloadable infographic version.

Explain Like I’m Grandma

Bitcoin is complicated, so I made some Encyclopedia Britannica style explanations for you that you can look up like recipes in a cookbook whenever you need them.

Table of Contents
Bitcoin
Cryptocurrency
FOMO
Store of Value
Blockchain
Cryptography
Decentralized
Mining
Crowdfunding
Venture Capital
IPO
ICO

Bitcoin

A digital currency you can use to send money directly to anyone with an internet connection. Think email, but for money: Only you own your account and whoever else has an address can connect with you.

Explain Like I’m Grandma

Bitcoin is like good old US Dollars, except every country accepts it and you can transfer it via the internet.

Cryptocurrency

A digital currency with a high safety standard for transfers and a publicly available transaction record. Any company can create their own, digital coins, which can be used for payments and data transfers worldwide.

Explain Like I’m Grandma

You know how you have to buy chips to play in a casino in Vegas? Imagine Target created their own chips and you had to buy those to shop there, but would get a discount for it. Target could do that with a cryptocurrency.

FOMO

Fear omissing out. The reason why people wait in line for 3 days to buy the latest iPhone or pair of sneakers. They don’t want to miss being part of a certain group, in this case, early technology adopters or sneaker pioneers.

Explain Like I’m Grandma

Betty down the street bought a new mixer, and she talks so fondly of it that now, you want one too.

Store of Value

Whatever allows you to keep your money in a way that makes you fairly certain it will still be worth the same amount or more when you choose to spend it in the future.

Explain Like I’m Grandma

Remember when you could just put $5 under your pillow and you knew you could still buy the same 10 loaves of bread with it next year? Because of inflation it doesn’t work like that any more, but there are other “pillows,” like gold and Bitcoin where you can put your money so it does not lose its value.

Blockchain

A public, chronological log book, where records are permanently stored across a network of personal computers. This way, facts can be verified by anyone and no one can change records in hindsight, making the system secure.

Explain Like I’m Grandma

When you get married you have to go to the city council and they will update the civil registry. Everyone who goes there and asks for your marital status can get an answer and the city makes sure your current status is true. A blockchain is like a civil registry on the internet that can be used for various things, like tracking payments, deals or votes.

Cryptography

The science and use of coding methods to prevent messages from being understood by third parties. If you call your friend John by his nickname Mowgli, that’s basic cryptography. People who don’t know John as well as you do won’t know he’ll respond to the name Mowgli, but you and him do. All cryptocurrencies use cryptography to secure transactions and communication.

Explain Like I’m Grandma

In WWII, the English spent years trying to crack Enigma, the coding machine the Germans used to cover up their radio communication. Each new cryptocurrency has its own Enigma to make payments safer.

Decentralized

A network that is run by the people, for the people, with no central, governing entity. Think Wikipedia: No single person owns it or makes all the decisions, but because everyone contributes, the overall system works.

Explain Like I’m Grandma

Imagine a village in 1800. The farmers farm, the fishers fish, the traders trade, and if everyone does their job, the community flourishes. When a big decision needs to be made, everyone comes together and decides, for example by voting, but no one alone can choose the village’s fate.

Mining

Every transaction on the Bitcoin network has to be approved. Miners use special math software to verify transactions, add them to the public registry and permanently lock them in place. Their reward are newly minted Bitcoins.

Explain Like I’m Grandma

Remember when everyone bought a pick and a shovel and went to the Klondike? Mining Bitcoin is the same, except you have to buy a fast computer and special software. Your computer runs 24/7 and in exchange, you have a chance to find some gold.

Crowdfunding

Holding a public event where everyone can contribute a certain sum of money to receive the product you will make, or attend the event you plan, or otherwise participate in your venture.

Explain Like I’m Grandma

Remember when we all chipped in together to buy Uncle Bernie that special grill he wanted? This is the same thing, except strangers pool together because they all want the same thing.

Venture Capital

The process of collecting money from rich individuals or institutional investors in exchange for a share of your business, so you can build your company and not have to worry about money while you’re starting out.

Explain Like I’m Grandma

Instead of using your own savings to start a business, you use other people’s money, but promise them a share of the profits instead.

IPO

Initial Public Offering. This is the name of the process a business goes through in order to be listed on the stock market. When that happens, everyone can buy a piece of ownership of the company in the form of one or many shares.

Explain Like I’m Grandma

Maybe you remember a situation where a village owned a forest and every villager owned a certain area, say one acre. When a business goes on the stock market, it turns itself into such a forest. From then on, everyone can buy and trade their acres.

ICO

Initial Coin Offering. The equivalent of a stock market listing for a company that builds a software product using blockchain. A certain number of coins is first minted and then sold to the public. Sometimes, the coins represent company ownership, but most of the time, they are just used to access the company’s product. The coins are also tradable and can be speculated with.

Explain Like I’m Grandma

Let’s say there’s a laundromat down the street, but you need to buy special coins to use the washing machines there. An ICO is an event where you can buy those coins for the products of cryptocurrency companies.

Advertisements

About Howard Mahere

I'm a Bitcoin/Cryptocurrency enthusiast ; motivator; author of "AN IMMIGRANT WITH A PLAN" and a John C Maxwell certified speaker . Happily married to Emely and a father to one son and two daughters. My greatest joy comes from inspiring others to maximize their potential. I feel fulfilled when I bring hope to the hopeless and encouragement to the discouraged. The truth is, we each have a past, and it's either our prison, our excuse OR our springboard to a brighter future. The choice is yours but as for me, I made up my mind a long time ago to use my dysfunctional tough childhood as a stepping stone . The late Zig Ziglar used to say "It's not what happens to you that determines how far you will go in life, it is how you handle what happens to you." This is my story and I am sticking to it!
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s