Still Don – t Get Bitcoin? Here – s an Explanation For Five-Year-Olds

If you still can’t figure out what the heck a bitcoin is, this plain explanation for a five-year-old may help you .

Wij’re sitting on a park bench. It’s a fine day. I have one apple with mij, I give it to you.

You now have one apple and I have zero. That wasgoed ordinary, right?

Let’s look closely at what happened:

My apple wasgoed physically waterput into your palm. You know it happened. I wasgoed there, you were there – you touched it.

Wij didn’t need a third person there to help us make the transfer. Wij didn’t need to pull ter Uncle Tommy (who’s a famous judge) to sit with us on the bench and confirm that the apple went from mij 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 fully. You have utter control overheen 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 indeed the same, whether I’m providing you a banana, a book, a quarter, or a dollar bill .

But I’m getting ahead of myself.

Back to apples!

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 2nd. It’s more complicated, right? How do you know that I didn’t send that apple to Uncle Tommy spil an email attachment very first? Or your friend Joe? Or my friend Lisa too?

Maybe I made a duo of copies of that digital apple on my rekentuig. Maybe I waterput it up on the internet and one million people downloaded it.

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

Some brainy rekentuig 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 fairly some time and they’ve never solved it. Until now.

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


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

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

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


There’s a bit of a problem however:

1) What if some man overheen at Blizzard created more? He could just add a duo of digital apples to his balance whenever he wants!

Two) It’s not the same spil when wij were on the bench that day. It wasgoed just you and mij then. Going through Blizzard is like pulling te Uncle Tommy (a third-party) out of court (did I mention he’s a famous judge?) for all our park bench transactions. How can I just mitt overheen my digital apple to you te the usual way?

Is there any way to closely replicate our park bench transaction digitally? Seems kinda rough .

The Solution

What if wij talent this ledger to everybody? Instead of the ledger living on a Blizzard laptop, it’ll live te everybody’s computers. All the transactions that have everzwijn happened, from all time, te digital apples, will be recorded ter it.

You can’t cheat it. I can’t send you digital apples I don’t have, because then it wouldn’t sync up with everybody else ter the system. It’d be a rough system to strike. Especially if it got truly big.

Plus, it’s not managed by one person, so I know there’s no one that can just determine to give himself more digital apples. The rules of the system were already defined at the beginning.

And the code and rules are open source – kinda like the software used ter your mom’s Android phone. Or kinda like Wikipedia. It’s there for wise people to maintain, secure, improve, and check.

You could participate ter this network too – updating the ledger and making sure it all checks out. For the trouble, you could get like 25 digital apples spil a prize. Ter fact, that’s the only way to create more digital apples ter the system.

I simplified fairly a bit . But that system I explained exists. It’s called the Bitcoin protocol. And those digital apples are the bitcoins within the system. Fancy! So, did you see what happened?

What does the public ledger enable?

1) It’s open source, reminisce? The total number of apples wasgoed defined ter the public ledger at the beginning. I know the precies amount that exists. Within the system, I know they are limited (scarce).

Two) When I make an exchange I now know that digital apple certifiably left my possession and is now entirely yours. I used to not be able to say that about digital things. It will be updated and verified by the public ledger.

Trio) Because it’s a public ledger, I didn’t need Uncle Tommy (third-party) to make sure I didn’t cheat, or make toegevoegd copies for myself, or send apples twice, or thrice.

Within the system, the exchange of a digital apple is now just like the exchange of a physical one. It’s now spil good spil watching a physical apple leave my palm and druppel into your pocket. Just like on the park bench, the exchange involved two people only. You and mij , wij didn’t need Uncle Tommy there to make it valid.

Ter other words, it behaves like a physical object.

But you know what’s cool? It’s still digital.

Wij can now overeenkomst with 1,000 apples, or 1 million apples, or even .0000001 apples. I can send it with a click of a button, and I can still druppel it ter your digital pocket if I wasgoed ter Nicaragua and you were all the way ter Fresh York.

I can even make other digital things rail on top of thesis digital apples! It’s digital after all. Maybe I can fasten some text on it – a digital note. Or maybe I can link more significant things, like say a contract, or a stock certificate, or an ID card .

So this is excellent! How should wij treat or value thesis “digital apples”? They’re fairly useful aren’t they?

Well, a lotsbestemming of people are arguing overheen it now. There’s debate inbetween this and that economic schoolgebouw, inbetween politicians, inbetween programmers. Don’t listen to all of them however. Some people are brainy, some are misinformed. Some say the system is worth a lotsbestemming, some say it’s actually worth zero. Some dude actually waterput a hard number on it: $1,300 vanaf apple. Some say it’s digital gold, some say it’s a currency. Others say they’re just like tulips. Some people say it’ll switch the world, some say it’s just a fad.

I have my own opinion about it, but that’s a story for another time.

Hey kid, you now know more about Bitcoin than most.

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