Bitcoin for dummies

Still Don't Get Bitcoin? Here's an Explanation Even a Five-Year-Old Will Understand

Nik Custodio
4 years ago
apples
If you still can’t figure out what the heck a bitcoin is, this simple explanation for a five-year-old may help you ...

apple-bitcoin

We’re sitting on a park bench. It’s a great day. I have one apple with me, I give it to you.

You now have one apple and I have zero. That was simple, right?

Let’s look closely at what happened:

My apple was physically put into your hand. You know it happened. I was there, you were there – you touched it.

We didn’t need a third person there to help us make the transfer. We didn’t need to pull in Uncle Tommy (who’s a famous judge) to sit with us on the bench and confirm that the apple went from me to you.

The apple’s yours! I can’t give you another apple because I don’t have any left. I can’t control it anymore. The apple left my possession completely. You have full control over that apple now. You can give it to your friend if you want, and then that friend can give it to his friend, and so on.

So that’s what an in-person exchange looks like. I guess it’s really the same, whether I’m giving you a banana, a book, a quarter, or a dollar bill …

But I’m getting ahead of myself.

Back to apples!

Pixelated apple
Now, let's say I have one digital apple. Here, I’ll give you my digital apple. Ah! Now it gets interesting.

How do you know that digital apple which used to be mine, is now yours, and only yours? Think about it for a second. It’s more complicated, right? How do you know that I didn’t send that apple to Uncle Tommy as an email attachment first? Or your friend Joe? Or my friend Lisa too?

Maybe I made a couple of copies of that digital apple on my computer. Maybe I put it up on the internet and one million people downloaded it.

As you see, this digital exchange is a bit of a problem. Sending digital apples doesn’t look like sending physical apples.

Some brainy computer scientists actually have a name for this problem: it’s called the double-spending problem. But don’t worry about it. All you need to know is that it’s confused them for quite some time and they’ve never solved it. Until now.

But let’s try to think of a solution on our own.

Ledgers

Ledger

Maybe these digital apples need to be tracked in a ledger. It’s basically a book where you track all transactions  –  an accounting book.

This ledger, since it’s digital, needs to live in its own world and have someone in charge of it.

Just like World of Warcraft, say. Blizzard, the guys who created the online game, have a “digital ledger” of all the rare flaming fire swords that exist in their system. So, cool, someone like them could keep track of our digital apples. Awesome  –  we solved it!