Thanks to the Internet, 2.1 billion people are now connected to each other, all around the world. As a result, the Internet makes it easier and cheaper to send mail or make phone calls, especially when compared to the old postal and telephone systems.
The system that we depend upon to send money, however, does not yet take advantage of the Internet. It still consists of a closed network of banks and credit card companies that manage those transactions for us, and it is slow, expensive, or both. Isn't it amazing, that in this day and age, we still can't pay our bills on weekends?
PayPal, like your credit card, also uses that same old banking network, and it's the reason why they charge two to three percent, or more, to let you send money through their system.
But if we're all connected to each other by the Internet, why do we still have to go through the slow and expensive banks to send money to each other?
Thankfully, someone invented a system that lets us send money to each other without using banks, and it's called Bitcoin. The Bitcoin network is part of the Internet and it works so well, in fact, that it has transferred hundreds of millions of dollars around the world over the last three years, and not a single mistake has ever been made. It's also the most powerful computer network in the world, because it's made up of all of its users, connected together.
To start using Bitcoin, all you have to do is buy Bitcoins from anyone who already has some. They can be easily exchanged for whichever currency you already use, and once you have Bitcoins, they can be sent to anyone, anywhere, for almost no fee.
Just like the postal service and telephone companies, Bitcoin makes the old ways of banking seem ancient. Best of all, like the Internet, nobody owns the Bitcoin network; it's for everyone to use as they wish.
To get started, just talk to any Bitcoin user; they would be more than happy to help you out. You can also check out weusecoins.com.
Thursday, December 29, 2011
How to Explain Bitcoin to Anyone
There have been numerous attempts at this, but I'm going to give it a shot, anyway. Feel free to pass this around or make suggestions as to how it can be improved.
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>To start using Bitcoin, all you have to do is buy Bitcoins from anyone who already has some.
ReplyDeleteOr mine it for a while.
I need an elevator pitch, not an essay. I tried explaining Bitcoins to two Wall St. traders this week. As best I can remember, word for word, this is how it went... :
ReplyDeleteAttempt 1) Fail. I blurted out : "Bitcoin is a digital commodity. It's the first in the world, it's a fungable, non-spoofable digital good, and it's distributed with bittorrent technology". Result? "That's sounds terrible, what idiot would buy that? I'm going now..."
Attempt 2) Success. "Bitcoin is a digital asset. It's a distributed store of value, based on strong encryption technology. There's a maximum number of coins that can be minted, so they have value. Currently it's $4." Result? "Bit-coin? That sounds awesome dude! Why haven't I heard about this before? I'm going to spend my afternoon on the internet reading about it!"
The difference may have been the personality of the people I was talking to, but the explanation definitely needs to move away from the tech if it's going to appeal to non-geeks.
@Isosceles: Do you think my explanation is too technical? I don't know if I can make it any less technical.
ReplyDeleteIf you want the elevator pitch version, then how about this:
"Banks, credit cards, and PayPal all rely on a slow and expensive communication system to manage your money. Bitcoin uses the Internet to achieve the same thing, so it's cheaper and faster. To use the Bitcoin system, all you do is exchange your currency for Bitcoins."
And then you can answer any follow-up questions. The hook is "cheaper and faster."
As always, the right pitch depends who you're pitching to. For users (not merchants), internet commerce with credit cards works fine. To the user, I think the win is the gold-like qualities of bitcoin, and fast/cheap/secure/private international payments.
ReplyDeleteThe win for the merchant is the low transaction fees, no chargebacks, and no account freezes.
The win for service providers is unregulated finance. MtGox would never have started if there were the same degree of regulation on Bitcoin payments as there are for regular financial services. I believe Bitcoin financial services is where things will really get interesting - this is an opportunity like the dot com boom. Customers & entrepreneurs can both win from better financial services.
IMHO, I think your original is too long for someone who wants the answer to the question "What is Bitcoin?". And hopefully it's easy to get them to ask that question :)
One problem with the cheaper-faster line is it doesn't always stand up to testing - BTC is neither cheaper nor faster for the first time user. BitInstant is the fastest I believe, they charge 2%-4.5% fees. MtGox charge 0.5% fees. To the user, Paypal is free. We need to get to 0.1% fees, or maybe advertising driven exchanges.
If you're pitching to someone unsophisticated, you should caveat it with a warning. Bitcoin is very new. Bitcoin wallets still get lost or stolen. Even the technical get caught out - there was been one transaction that I would qualify as a Bitcoin mistake, MtGox sent BTC to an address that couldn't be redeemed.
I think the problem with focusing on low BTC transaction fees is it's irresponsible. Currently the volatility is so high you might lose 10% of the value of your money between purchasing BTC and purchasing an item.
Write it so your mom could understand it. :P
ReplyDelete