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What is Bitcoin? An explanation even a kid can understand

(Business Finance) Bitcoin is a digital currency that has been around for several years, but many have ignored it because it sounds geeky, but everyone should know how it works.

bitcoin apple

What is Bitcoin?

If you’ve watched the noise and heard the word “Bitcoin” or “cryptocurrency” or “digital currency,” you and many people may have already tuned out. Bit mistake. Some argue that it is the future of finance, others say it is a fad, but we say that regardless of the outcome, you should at least be aware of the movement, because Bitcoin is just one of many moving parts.

Bitcoin is a digital currency based on peer to peer technology and is completely decentralized and was established in 2009, already accepted by companies like WordPress and Wikileaks and over 1,000 other companies as cash. The reason Bitcoin has garnered so much attention in recent months is two-fold: not only did it reach a record value of $256, then plummeted, surprising advocates of what was designed to be a self-stabilizing economy, and also becoming the focus of numerous federal investigations, uncovering black markets associated with the use of Bitcoin.

Hang tight, there is a better explanation

If there is still a struggle to understand, a popular visual explanation is available via video, but Nik Custodio, UX Director at FTI Consulting in New York recently penned a thoughtful piece on the topic, entitled, Explain Bitcoin Like I’m Five. We recommend taking a few minutes to read it – we’ll wait…

Custodio explains Bitcoin through illustration of apples – remember when you had to solve math problems through the use of apples? It’s kind of like that, only through in some economic complexities, and you’ve got a tangible explanation.

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“Well, a lot of people are arguing over it now,” Custodio writes. “There’s debate between this and that economic school. Between politicians. Between programmers. Don’t listen to all of them though. Some people are smart. Some are misinformed. Some say the system is worth a lot, some say it’s actually worth zero. Some guy actually put a hard number: $1,300 per apple. Some say it’s digital gold, some a currency. Other say they’re just like tulips. Some people say it’ll change the world, some say it’s just a fad. I have my own opinion about it.”

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.



  1. Rishona Campbell

    February 3, 2014 at 6:14 pm

    There’s a typo. 2nd sentence says “Bit mistake”, when it should say “Big”…

    • Darrow_for_the_Prosecution

      February 4, 2014 at 1:55 am

      It’s a PLAY on words silly.

  2. Pingback: Bitcoin adoption could spike with 21 Inc.'s help - The American Genius

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  4. Tom

    March 22, 2018 at 6:24 pm

    Find me a kid then, ’cause I still don’t understand this. Yes, I read the recommended “explanation,” and I can grasp how the blockchain system is s’posed to work in terms of regulating transactions, but I still don’t have anything close to an intuitive feel for the relation between bitcoins and conventional “value,” i.e. conventional, recognized legal tender. If you have a zillion bitcoins and want to cash out, who “writes the check?”

  5. Pingback: Bitcoins worth $300K recovered from an old zip file - The American Genius

  6. Pingback: Walmart is hiring a 'Cryptocurrency Lead' - are they developing their own crypto?

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