Everyone is talking about blockchain and Bitcoin today, from the office to your barber shop. Blockchain technology has gained popularity, and more people appreciate the idea of having decentralized currency that can be traded and used as a medium of exchange. Therefore, it will come as no surprise if your child approaches you with the question, “what is blockchain technology?”
The terminologies and concepts revolving around blockchain and Bitcoin can be complicated for your little one to understand. But as a parent, you have no choice but to explain this concept to your kids. After all, blockchain technology is here to stay, and there are high chances that it will still be around when your children grow up.
Explaining this revolutionary technology to your children will not only furnish them with valuable information but also act as a foundation for them to make wise investment decisions as they grow up. In this light, here is a quick overview of how to explain the meaning of Bitcoin and blockchain technology to your kids in the simplest way possible.
Defining Blockchain Technology
The first thing you want to do is to explain blockchain technology in a way that your little one can understand. Blockchain refers to a decentralized public ledger that records transactions across many computers. Blockchain has no central point—all information is stored in many different computers at once across the internet, and this makes it hard for anyone to break into a single computer or steal the data.
Think of the traditional way of sharing documents with collaboration. One would have to send a Word document to another person and wait for them to make edits and send the document so that they can view it. You cannot edit the data while it’s in the hands of the other recipient—you have to wait for them to finish and send. That’s how databases work today.
However, blockchain technology allows users to access the same information at the same time. All information is accessible to all participants at the same time. No one person can control the data.
Blockchain records various kinds of information. It can record money, identities, music, or even agreements between people. The technology eliminates distrust as all the information that is meant to be there is captured. If someone tries to change data, it spoils the code, and all users will know about it. That’s what makes blockchain accurate, reliable, and convenient.
The Significance of Blockchain Technology
So what’s the importance of blockchain? Why should you care to know about it? Well, Bitcoin and other cryptocurrencies were formed on the basis of this technology. In 2009, an anonymous programmer created the first cryptocurrency known as Bitcoin.
But what is the meaning of Bitcoin?
Simply put, Bitcoin is a digital currency that can be bought, sold, and used to purchase goods and services. Unlike the dollar or other currencies, the Bitcoin has no paper and coin persuasions. It is a virtual currency and is only usable digitally.
Now, back to blockchain…
The blockchain is the technology that manages the database that is used to record Bitcoin transactions. Do you remember how we said that blockchain is decentralized and no single entity can control it? By managing Bitcoin, blockchain makes the currency decentralized as well—it works on a peer-to-peer basis.
Since no one can tamper with the transactions without spoiling the code, Bitcoin enables people from all over the world to make digital trades without an intermediary. They don’t need a bank or government to protect them. Thanks to blockchain technology, the Bitcoin transaction system is transparent and foolproof.
Benefits of Bitcoin
What are the advantages of Bitcoin and blockchain and why have they gained so much popularity? Below are some of the benefits of Bitcoin and why it is a viable investment:
- Bitcoin is not controlled by any central banks or governments; therefore, individuals don’t have to worry about external interference.
- Unlike fiat currency (centralized currency), Bitcoin has no risk of inflation, and this enables users to hold their coins for a trade.
- Bitcoins can be used anywhere across the world. One can use them to buy anything on the internet without being limited by geographical barriers and currency exchange rates.
- Joining the Bitcoin market is easy and straightforward. Newbie traders can look for the best Bitcoin broker and get professional help in maneuvering the market.
- The transparency prevents merchants from charging extra fees without being noticed, and this reduces the cost of transactions.
- Blockchain hides personal information of users, and this protects one from identity theft on the internet.
Blockchain technology and Bitcoin are here to stay. Therefore, if you have little ones who are curious about this technology, educate them by all means. They can even start trading in crypto once they are of age. Remember to be as simple and clear as possible and allow your little one to ask questions whenever they don’t understand. Be creative and use visuals wherever possible to ensure that the child gets an in-depth understanding of the technology.
Bill Adams has been into currency trading for over 5 years. After taking a short course about Forex and Cryptocurrency, he decided to put his knowledge to good use as a writer and trader at TenkoFX. His Educational background in Business Administration and Economics has given him a broad base from which to approach Forex and Cryptocurrency topics.