I love grandmas. Not just my (unfortunately, deceased) own, but all grandmas. Their attitude towards life is often amazing, but the way they try to keep up with the current technological advances is even more astonishing.
Grandmas tend to fixate on current hot topics, and chances are that at least half of the grandmothers in this world have or will (in the near future) ask(ed) what’s the deal with cryptocurrencies.
If you find yourself as the fortunate recipient of a crypto-query from your grandma (or any grandma, for this matter), here is how I envision the exchange might go. For research purposes, please let me know if your experience deviates significantly.
Grandma (G): “This pitcoin thing is all over the news! My darling, you are young and smart; do you mind explaining why pitcoins exist?
You (Y): “Oh, you mean BITCOIN, grandma.”
G: “Yes, that. Whatever. Don’t be a smart-ass with me, okay? Just tell me why people are going crazy about them.”
Y: “Of course, my precious grandma. So, bitcoin is one of the many cryptocurrencies out there. Is it the larg—.”
G: “Crypto, as in a tomb under a church?”
Y: “No. Crypto as encrypted or secret.”
G: “Got it. Come on, continue.”
Y: “Cryptocurrencies are digital money that do not rely on third-parties, like banks or governments, to function. It is a network of computers and software that control the transactions, and the supply of the currency.”
G: “But how come? Who would want to use that currency instead of the good old dollar?”
Y: “Well… many people, actually. Think about this, the value of the current dollar, this is the interest rate, is controlled by central authorities that may or may not be trus—.”
G: “The American government is a great institution and will always be trusted. Always. Don’t you dare to say that. You youngsters don’t know how to respect the flag. I still remember when Nixon fixed this country’s economy and propelled it to global greatness.” [Grandma throws a threatening look. Then wipes the drool off her face using a handkerchief with a massive bald eagle-stamped on it.]
Y: “Ehm. Yes, sure. But people living in other countries may not be as lucky as we are, grandma. They haven’t had their ‘Nixon.’ Think about a hard-worker living in Zimbabwe at a time when the Zimbabwean dollar was still in use. Every time she receives her salary, she knows that hyper-inflation shrinks the value of her money by the minute, so she better hurry to buy those loafs of bread. She also fears that her bank, or the government, can freeze her bank account at any given point.”
G: [stares at you with a blank face. She might be farting, but she may also be trying to understand your hypothetical scenario. You can’t know for sure, but that is not important now. You decide to continue.]
Y: “She has no choice, right? Her salary comes in Zimbabwean currency and that’s it.”
G: [still staring.]
Y: “Now, imagine that one day, her boss says ‘hey, from now on, you can opt to receive your salary in American Airlines frequent flyer points.’”
G: “Oh, don’t be silly, my darling.”
Y: “Sounds stupid, I know. But stay with me, grandma. The Zimbabwean lady would then need to choose between receiving her salary in fiat currency, Zimbabwean dollars in this case, and risking her money being de-valued every day and/or being held hostage by the government or bank, OR receiving her salary in the form of points controlled by an American company that can, in turn, be redeemed for things like gift cards that can, in turn, be used to buy groceries at her local shop. These American Airlines points, she would assume, would hold their value better than the Zimbabwean dollar, and American Airlines, as a company, can be trusted better than her government or bank.
G: “Hmmm.”
Y: “See? This is just one example of the utility of alternative currencies.”
G: “Hmmm.”
Y: “Cryptocurrencies are alternative currencies, but unlike American Airlines points, there is no 3rd -party controlling them. The community, as a whole, is in charge of maintaining the structure in which the coins run.”
G: “But people say that cryptocurrencies are used by the bad guys to buy drugs.”
Y: “So? You know which is the most used currency to buy drugs in the world? The good American Dollar! And nobody is suggesting to eliminate it, correct? Not because something good is used to do something bad, it means that you must stop it. The root cause of the world’s drug problem is that some people like to buy drugs, not that cryptos can be used to buy them.”
G: “Hmmm.”
Y: “So, you may not live to see it, but banks as we know them won’t be around much longer because they will no longer be needed. I believe cryptocurrencies will substitute fiat currencies, at least partially. People will start to appreciate the value of using cryptos for their day-to-day monetary needs, and ditch mainstream currencies.”
G: “That’s a conspiracy theory.”
Y: “It’s not. Most, if not all crypto-coins have the most important features of any other currency. They are portable, divisible, and durable. Also, most transactions are instantaneous, even across the world; fees are lower than regular banks, and you can even claim that some are safer, if you compare them to failed currencies like the Zimbabwean dollar, or the Venezuelan bolivar.”
G: “It still sounds, crazy. Perhaps I’m too old to understand the whole thing.”
Y: “Perhaps you are right, grandma.”
DONE! Nice attempt to explain the basics of why the world needs crypto-currencies.
What do you think? Please share your comments, and even better, your experiences trying to explain cryptos to other (perhaps older) people!