How Do You Explain Bitcoin and Digital Money to Kids?

Digital money is a concept that has taken the world by storm and completely revolutionized how we carry out acquisitions, pay for services and products, close contracts, and so on. In simple terms, digital assets and money have given financial transfers a new meaning. You no longer need to touch metal coins or paper money, and this isn’t entirely due to cards. People can check out the BTC price prediction anytime and understand where the market is going. Or they can mine their own crypto units and then sell them on the marketplace. Even if the received amount isn’t usually super hearty, carrying out new activities enabled by blockchain is a thing one shouldn’t sweep under the cover. Future generations may not even know how paper money feels or understand the concept of taking care of their integrity. In fact, they’ll take care of other things, like their digital wallets’ passcodes and the quality of the digital service provider used.

If you zoom out on the picture and know you’ll need to discuss Bitcoin and digital money with a child, appropriating the necessary knowledge and crafting a guideline yourself is the shortcut to success. From how and why people invest in crypto to how social media impacts these assets’ value, we’re offering you a lowdown on the main aspects to tackle and the ways to do it.

Photo source: https://www.freepik.com/free-photo/bitcoin-3d-illustration_13789589.htm#fromView=search&page=1&position=7&uuid=417f5907-14a0-4df1-8ade-b0d4f0601439&query=Bitcoin

Get the Crypto Concept Yourself

Before you start talking about Bitcoin, Ethereum, NFTs, digital money, and everything in between, let’s first ensure an accurate definition of them. Breaking crypto down can be a confusing process, given the many niche words revolving around it. A new jargon has been born together with cryptocurrency – proof-of-work in creating blocks and cryptos stands as an example. There are all sorts of sea creatures that point out to an investor’s crypto amount that goes beyond the wealthy whale, such as shrimps (those holding the littlest amounts of crypto) and humpbacks (those owning over 5.000 cryptos). You find exchanges and miners in between, entities with varying but huge amounts of crypto, who can influence an asset’s market value through their activities. Consequently, they impact the market values of more cryptos than one may think of.

Cryptocurrency is indeed guesswork to understand. The main idea is that through the internet, individuals see a new revolution no matter their age category. Everything revolves around the leading crypto, digital currencies in general, and blockchain technology. What is blockchain, you may ask?

First, the Blockchain Lesson

Blockchain represents a method of stocking data that prevents or makes it impossible to modify, compromise, fraud, or hack the information once it’s stocked in the database. A blockchain is simply a fusion of computer chains linked to one another and which replicates and distributes a digital ledger of every transaction ever registered. Simply put, there’s not a single database or organization that holds the valuable information, but more actors that can’t be corrupted. Every occurring transaction comes with a document that’s easily seen by every chain participant and registered in the transaction history for life (or, at least, it’s supposed to).

Cryptography is a technology that encrypts or encodes transactions. It is employed when securing records and maintaining their accuracy are vital, such as in financial transactions where the object of acquisition must not be changed or modified.

Thanks to blockchain technology, users can all access the same piece of data at the same time, should they want to. Everyone has access to the information simultaneously, so there’s no such thing as data unavailability. This is a reason why some of the world’s retail leaders use blockchain to gain their customers’ trust. Through this, one can verify if a product’s origins are eco-friendly, as stated, for instance, or whether the brands’ promises as to how a core material is grown are true or just misleading advertising.

What About Cryptographic Currencies?

The currency used to be represented as a tactile means of exchange. If you want to capture your kid’s attention, talk to them about how people first traded things like animal skin or seashells for products like homegrown veggies or animal products. Now, these items were hard to carry around, so people came up with the idea to transport gold. Similarly weighty, this is how metal and paper money got born, transforming into a practice that has worked for decades. As technology has evolved, so has the way people exchange wealth for products, services, and even information. You can compare digital money with monopoly tokens or Roblox credits, for they can do the same – except that they’re stored digitally.

In contrast to those palpable currencies or tokens, you don’t touch them – but you can see and make use of them. Also, their value isn’t “fixed” and determined by government legislation or other factors impacting the value of currencies like the USD or GBP. Instead, cryptocurrencies’ worth is determined by what investors, aka people, are down to offer for them.

The Social Media Factor

As already stated, cryptocurrency derives value from people’s attention and impressions. In professional words, it’s about a combination of investor sentiment, social media hype, and news releases, among other things.

Social media – the environment that your kid is likely familiar with – plays a crucial role in determining crypto’s values. You can exemplify this by pointing out meme coins like Doge Coin, which gained value basically by making people laugh. More exactly, the first meme coin developer considered making a meme coin a pleasant way to make fun of the leading crypto, Bitcoin. The bubble grew to accommodate thousands of meme coins, many of which have generated hearty profits for shrewd investors.

No banks, brokers, or governments involved.

In the context of blockchain and crypto, decentralization is a core concept to grasp, boiling down to how the blockchain isn’t governed by any government, group, or individual. The peer-to-peer crypto network permits users to direct wealth straight to one another in an instant without needing the involvement of a broker, bank, or government—as is the case with the traditional monetary system. This way, decentralized digital currencies exist and are used.