These Two Analogies Will Help You Explain Bitcoin to Anyone

Explaining Bitcoin to someone who knows nothing about Bitcoin isn’t easy. In fact it’s fiendishly tricky. Describing concepts such as blockchain, decentralized networks, and permissionless ledgers to beginners is as tough as describing the color orange to a blind person or the taste of an orange to someone who’s never peeled one. Two new Bitcoin analogies surfaced this week, however, that should make that task easier.

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How to Explain Bitcoin to Anyone

Complete the following sentence: “Bitcoin is like ____.” Defining Bitcoin isn’t easy; hell, even bitcoiners can’t agree on what the cryptocurrency is designed for, be it a store of value, medium of exchange, or a form of censorship-resistant money. It’s no surprise, therefore, that well-intentioned attempts at explaining Bitcoin to beginners can go awry. Two very different but equally compelling analogies provide a fresh take on Bitcoin. One likens it to text messaging, the other to fungus. Both are effective in driving their point home, with the text messaging comparison particularly suited to Bitcoin beginners.

Analogy 1: Bitcoin Is Like Text Messaging

Advanced by ‘Beautyon’ on the Bitcoin Matters podcast, and then transcribed by David van der Weele on Twitter, the first analogy goes as follows: Bitcoin operates like text messaging, only instead of words, you can only send numbers. Those numbers are called bitcoins and because their supply is limited (unlike text messages, which are infinite), they can serve as a form of money.

Continuing the analogy, van der Weele explains how “Anybody can download a bitcoin app on their phone and start using it to buy things online or [receive bitcoin] for doing work for others.” This is similar to text messaging apps such as Whatsapp where it is necessary only for the other person to install the application, whereupon anyone in the world can message them.

Rounding off the Bitcoin-as-text-messaging analogy, van der Weele summarizes:

Analogy 2: Bitcoin Is Like Fungus

While less relatable to the average person, the second Bitcoin analogy to have garnered attention this week is arguably more accurate. The only downside is that to fully appreciate it, a degree of familiarity with eukaryotic organisms is required. The concept, advanced by Brandon Quittem, is that the Bitcoin network, made up of nodes, miners, wallets and other points of access, spreads just like fungus, which has been described as “earth’s natural internet.”

“Fungi don’t have a central ‘brain,” explains Quittem, “they’re decentralized networks distributing information and resources. These fungal networks form consensus on resource management, reproduction, and defense strategy.” It is fitting therefore, that “Mycelium”, a name that many bitcoiners associate with the popular BTC wallet, draws its name from fungus threads that branch together to form colonies.

Brandon Quittem drives the analogy home by adding: “Fungi are the most successful species on our planet. They “inherited the earth” after all five mass extinction events … because fungi are antifragile decentralized networks and can adapt quickly and don’t need sunlight to survive and find their own food. Bitcoin will become the most successful monetary species because it’s decentralized, adapts (relatively) quickly, finds its own food (unmet demand), and doesn’t need government support. In the event of a mass monetary extinction event, bitcoin will ‘inherit the earth.’”

Comparing Bitcoin to fungus probably isn’t going to entice a slew of new crypto converts. But it’s certainly a novel way of looking at a decentralized network that has thus far resisted all attempts to eradicate it.

How do you describe Bitcoin to friends and family? Let us know in the comments section below.

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