Ask HN: How would you explain the blockchain (and BTC) to your grandparents?
I know how the blockchain works, in some detail (the consensus algorithm, ECDSA, transaction blocks, mining, double-spending problem, etc.) How do I explain all of this in 5 to 10 minutes to someone who does not follow tech (for example, my grandparents), as simply as possible?
10 comments
Tell them that it's just a currency, but unlike a normal currency where the government has control, nobody has control.
Then there's a big sheet of paper where the transactions with their amounts are written and shared with everybody, that way everybody knows how much each of them has. So when they receive money, they know that whoever sent them has money.
Then just raise up the simple problem of you copying that last transaction and transferring money to somebody else before everybody knows that you did the first. You can just say that there is a system that waits until that other transaction is processed and be done with it. It makes no sense to actually explain in more depth even to a savvy user...
even if you do explain, it will be like when they try to explain poverty in the third world to Americans... they can even see the picture, but they won't understand because they've never lived it.
In the end, all you do is to think that you managed to explain something but the other party didn't really understand you
Then there's a big sheet of paper where the transactions with their amounts are written and shared with everybody, that way everybody knows how much each of them has. So when they receive money, they know that whoever sent them has money.
Then just raise up the simple problem of you copying that last transaction and transferring money to somebody else before everybody knows that you did the first. You can just say that there is a system that waits until that other transaction is processed and be done with it. It makes no sense to actually explain in more depth even to a savvy user...
even if you do explain, it will be like when they try to explain poverty in the third world to Americans... they can even see the picture, but they won't understand because they've never lived it.
In the end, all you do is to think that you managed to explain something but the other party didn't really understand you
It is a largely failed experiment in making internet cash that has turned into a speculative bubble not unlike Tulip Mania.* The intent was to be able to make small payments online without attaching your name and other personal information to it, much like you can use cash instead of a debit card to pay for things without giving your name. But that vision really hasn't materialized. Meanwhile, it has been bid up crazily and become insanely expensive, like the aforementioned tulips.
* https://en.m.wikipedia.org/wiki/Tulip_mania
* https://en.m.wikipedia.org/wiki/Tulip_mania
My constructivist explanation is as follows (I imagine talking to my grandmother):
1/ You are currently using a bank where they increase your balance when you deposit money, decrease it when you withdraw money or transfer it to another account. This money is printed by the Treasury Department.
2/ Many people with interest in cryptography and general society issues started to think about how people could make direct money transactions without a financial organization acting as a broker and without another centralized organization printing the money.
3/ Now imagine you have digital money stored in your mobile phone, USB storage, or hard drive. If you send this money (represented as files) to someone, it is obvious you can copy this money and also send it to someone else. This is the DOUBLE (or multiple) SPEND PROBLEM.
4/ A lot of smart people tried to find alternative solutions to this problem without success.
5/ In 2008 an anonymous person called "Satoshi Nakamoto" published the first known solution to this problem (under certain assumptions):
5.1/ People share a common file where they append the new transactions observed. In this way they know if money sent from person A to B was already spent.
5.2/ Now we have the following problems: (i) if there are thousand of people doing transactions, they need to communicate the transactions to all members of the network and it takes time until it propagates to everyone, so A can send a transaction to B and very quickly send a transaction to C with the same money, when B knows about the second transaction, and C knows about the first, both know that A spent the money twice but they already accepted the transactions and (ii) they don't know for sure which one comes first.
5.3/ So, we should decide who can propagate the transaction to remove this problem and give an incentive to them. We will call them miners. The protocol agreement will send new printed money to these miners plus fees that the people can add as an extra incentive.
5.4/ To decide who mines transactions (we don't need to talk about blocks) miners should find a solution to a mathematical function that requires trying a lot of numbers, one by one. The one who invest in more powerful devices solves the problem faster and earn more money.
5.5/ Now we have an extra problem, what happen when many miners find the the solution to the problem and one have a transaction using the same money from A to B than from A to C? Miners keep adding transactions as fast as they can and the longest chain of transactions wins. There are some statistics that show that when we see a transaction from A to B we need to wait until the chain has a certain length to be sure than a transaction from A to C never happens. Every person (node) in the network checks the same protocol.
1/ You are currently using a bank where they increase your balance when you deposit money, decrease it when you withdraw money or transfer it to another account. This money is printed by the Treasury Department.
2/ Many people with interest in cryptography and general society issues started to think about how people could make direct money transactions without a financial organization acting as a broker and without another centralized organization printing the money.
3/ Now imagine you have digital money stored in your mobile phone, USB storage, or hard drive. If you send this money (represented as files) to someone, it is obvious you can copy this money and also send it to someone else. This is the DOUBLE (or multiple) SPEND PROBLEM.
4/ A lot of smart people tried to find alternative solutions to this problem without success.
5/ In 2008 an anonymous person called "Satoshi Nakamoto" published the first known solution to this problem (under certain assumptions):
5.1/ People share a common file where they append the new transactions observed. In this way they know if money sent from person A to B was already spent.
5.2/ Now we have the following problems: (i) if there are thousand of people doing transactions, they need to communicate the transactions to all members of the network and it takes time until it propagates to everyone, so A can send a transaction to B and very quickly send a transaction to C with the same money, when B knows about the second transaction, and C knows about the first, both know that A spent the money twice but they already accepted the transactions and (ii) they don't know for sure which one comes first.
5.3/ So, we should decide who can propagate the transaction to remove this problem and give an incentive to them. We will call them miners. The protocol agreement will send new printed money to these miners plus fees that the people can add as an extra incentive.
5.4/ To decide who mines transactions (we don't need to talk about blocks) miners should find a solution to a mathematical function that requires trying a lot of numbers, one by one. The one who invest in more powerful devices solves the problem faster and earn more money.
5.5/ Now we have an extra problem, what happen when many miners find the the solution to the problem and one have a transaction using the same money from A to B than from A to C? Miners keep adding transactions as fast as they can and the longest chain of transactions wins. There are some statistics that show that when we see a transaction from A to B we need to wait until the chain has a certain length to be sure than a transaction from A to C never happens. Every person (node) in the network checks the same protocol.
From a recent bitcoin thread here (apologies to the original poster, I've forgotten who it was...)
Bitcoin is multi-level marketing for millennials.
Bitcoin is multi-level marketing for millennials.
Bitcoin is a public ledger of agreed transactions. I give you some goods, it's registerd in the ledger that you owe me some number of "thingies". Later someone gives me some goods, and on the ledger I transfer your debt to them, and so it goes round.
At some point, someone offers to give me cash for the thingies registered against my name, I agree and thus they have the thingies, and I have cash.
The clever technical parts are how the public ledger is maintained without there being a central authority, and without having to publicly name the individuals who hold the assets.
I've used that explanation several times to good effect so far.
At some point, someone offers to give me cash for the thingies registered against my name, I agree and thus they have the thingies, and I have cash.
The clever technical parts are how the public ledger is maintained without there being a central authority, and without having to publicly name the individuals who hold the assets.
I've used that explanation several times to good effect so far.
You don’t really understand something if you can’t explain it...
Four friends exchange goods between each other and keep a book of records for every transaction. The person who keeps that book can easily alter transactions to his favour, but if everyone keeps one copy of transactions record it becomes difficult to cheat unless more than 50% people cheat.
The distributed record of transactions/ledger us known as block chain.
> I know how the blockchain works, in some detail (the consensus algorithm, [...])
This alone shows that you don't. There's no such thing as "consensus algorithm" in blockchain. Blockchain does not work with distributed consensus problem.
> How do I explain all of this in 5 to 10 minutes to someone who does not follow tech (for example, my grandparents), as simply as possible?
Blockchain: a service that puts so called "timestamps" under documents, so you can tell which one of two related documents was issued earlier.
Bitcoin: the documents that are timestamped by blockchain describe who sends how much to whom. (So kind of a ledger.)
This alone shows that you don't. There's no such thing as "consensus algorithm" in blockchain. Blockchain does not work with distributed consensus problem.
> How do I explain all of this in 5 to 10 minutes to someone who does not follow tech (for example, my grandparents), as simply as possible?
Blockchain: a service that puts so called "timestamps" under documents, so you can tell which one of two related documents was issued earlier.
Bitcoin: the documents that are timestamped by blockchain describe who sends how much to whom. (So kind of a ledger.)
My father in law was at a loss when I was transferring files from one computer to another via USB drive. He thought I was some magical wizard. Any average grandparent aged person will not be able to comprehend the terms you are using. I tried explaining what Dropbox was and it was lost.
So you have to relate the topic to something they know. So explain that it is like Bingo, and the order of every ball picked, every winner, for every match at their local Bingo hall has been recorded on a ledger, like a checkbook, and scrambled by encrypting it like a decoder ring that way someone can't forge the ledger. People verify each event that occurred, kinda like someone verifies a valid Bingo. You don't need any other currency because the ledger states you won match 113 for 150 BingoCoin, 3 days ago. And there are places where you can exchange the BingoCoin for USD, and that those exchange rates are fluctuating rapidly. So your 150 BingoCoin might be $100 USD or it could be $1000 or it could be $1.50 depending. But it will always be worth 150 BingoCoin.
So you have to relate the topic to something they know. So explain that it is like Bingo, and the order of every ball picked, every winner, for every match at their local Bingo hall has been recorded on a ledger, like a checkbook, and scrambled by encrypting it like a decoder ring that way someone can't forge the ledger. People verify each event that occurred, kinda like someone verifies a valid Bingo. You don't need any other currency because the ledger states you won match 113 for 150 BingoCoin, 3 days ago. And there are places where you can exchange the BingoCoin for USD, and that those exchange rates are fluctuating rapidly. So your 150 BingoCoin might be $100 USD or it could be $1000 or it could be $1.50 depending. But it will always be worth 150 BingoCoin.
The blockchain is an electronic accounting ledger. It uses some clever encryption technology to make it very hard for transactions on the ledger to be forged or changed.
Bitcoin, and other cryptocurrencies, are electronic coupons that can be bought, sold and exchanged on the electronic ledger.
The reason you've heard of Bitcoin is that it's been somewhat of a fad recently and the coupons have been changing hands for thousands of dollars.
For background, Bitcoin was invented as a political experiment to design a currency that wasn't controlled by any government or bank. In order to make this work, the blockchain has some interesting features that allow it to be used without having a central authority to manage the ledger.
One of the unfortunate things about Bitcoin is that people often conflate the technical parts, the political parts and the financial parts. This can make discussions about it very confusing indeed.
Bitcoin, and other cryptocurrencies, are electronic coupons that can be bought, sold and exchanged on the electronic ledger.
The reason you've heard of Bitcoin is that it's been somewhat of a fad recently and the coupons have been changing hands for thousands of dollars.
For background, Bitcoin was invented as a political experiment to design a currency that wasn't controlled by any government or bank. In order to make this work, the blockchain has some interesting features that allow it to be used without having a central authority to manage the ledger.
One of the unfortunate things about Bitcoin is that people often conflate the technical parts, the political parts and the financial parts. This can make discussions about it very confusing indeed.