Good analogies to explain crypto, blockchain to people?


#1

Opinion:

Crypto/blockchain is not any more complicated than other topics. The fact that there is an overwhelming amount of information (and misinformation) + it’s highly technical + it’s a lucrative field, make the “barrier energy” to wrap your head around this stuff, very high.

What are some good mental models to explain crypto/blockchain to people who have are complete foreigners to this space?

One analogy I’ve heard is that if the internet was a web of information, crypto is a web of “value.” “Value” is in quotes because, crypto is redefining (or at the very least, making us question) what money is. Web of money wouldn’t do justice.


#2

Here’s one way to look at it. There was a point in time when humans were geographically walled off from one another. Distribution and sharing of information, news, books, music, etc. was limited to major national and global channels like news outlets, book publishers, and record labels. And it came at a cost.

Now these things flow between one another quite easily, and quickly, and at major cost savings. Also they can even flow from 1 person to 5 million instantly!

Same with value, digital transactions, money, etc. can flow between these same webs that connect people fast and far in this new era. And crypto is one great way to do it securely.


#3

I like the digital value analogy - not an analogy but I usually go to explaining bitcoin through history.

I do like Peter Thiel’s “Crypto is Libertarian, AI is Communist” analogy. Usually this sparks some interest as the entire quote is controversial and a hot topic at the moment.

I think history is actually a pretty good way to explain crypto to complete foreigners (it’s also rooted in fact, and something people don’t really know about, so it’s generally interesting to them) - and by this I mean: 1. History of Money, 2. History of the Internet/Harware

Not an analogy, but explaining to my mother went like this:

  • How long and why we used gold; what we used before gold; what caused the shift between those forms of currency
  • What has happened due to the internet in the past 40 years (global, instant, free communication)
  • Why this enables us to create a new form of money (that is not printed by the Fed)
  • Bitcoin is the first iteration of this new form of money - and it’s working surprisingly well (even though many will say a future cryptocurrency will overtake Bitcoin, the opposite is very plausible as well - as stated in the Bitcoin is Worse is Better article)

I also think mining is usually neglected in a lot of introductory explanations - but is one of the most fascinating and important pieces of why bitcoin works


#4

I really like the Internet analogy. I would add the word exchange e.g. “Crypto is like the web for value exchange.” People can utilize the web without adding to it i.e. just consume information. To utilize crypto, you have to exchange or create something…you can’t be passive.

As far as simplifying… I find “blockchain” as one word makes it inherently more confusing to newbies. “Block chain” is more intuitive and doesn’t presume one really gets the technology. I can’t find when/why it became one word, but as far back as 2013 at least, it was two words.

Side note, after I typed the above I was curious to see if there’s any science behind supporting my opinion. I stumbled upon something called the Flesch-Kincaid Reading Ease readability test. The US gov uses it to make sure documents are understandable by the “average” American. Would be neat to put crypto information/docs through this test!


#5

This isn’t my analogy. Credit goes to Linda Xie at Scalar Capital.
Source: Her tweet

If you were to create ideal money from scratch (forget what we know now), you’d want it to be

  1. Digital because you don’t want to carry your coins or change around.

  2. Global because you don’t want to exchange your money every time you go to a new country.

  3. Out of the control of third parties b/c you don’t want things like governments or banks to tell you when you can use your money, take it away, or keep printing more.

    Why?

    Well some countries like China have very strict capital controls and you can’t even move out your own money. In history women have been denied from even owning bank accounts. You can’t move your money out when the banks are closed. The government took people’s things during the Cultural Revolution in China just because they were educated. There are almost 2 billion people who don’t even have bank accounts. There are countries like Venezeula that are going through hyperinflation.

All of those features combined is what cryptocurrencies are.