10 Considerations when explaining cryptocurrency to a newbie

10 Considerations when explaining cryptocurrency to a complete beginner (newbie)

Explaining cryptocurrency to a novice can be challenging, but breaking it down into simple terms can make the concept more understandable. Here’s a basic explanation:

1. Start with the Basics

Digital Currency:  Explain that cryptocurrency is a form of digital or virtual currency. Unlike traditional currencies issued by governments (fiat currencies), cryptocurrencies exist only in electronic form.

2. Blockchain Technology

Decentralized Ledger:  Introduce the concept of blockchain, which is a decentralized and distributed ledger. This means that instead of a central authority (like a bank), the information about transactions is spread across a network of computers. 

3. Cryptography

Secure Transactions: Emphasize the use of cryptography to secure transactions and control the creation of new units. This makes cryptocurrencies resistant to fraud and counterfeiting.

4. Bitcoin as an Example

  • First Cryptocurrency: Use Bitcoin as an example since it was the first and is the most well-known cryptocurrency.

  • Mining: Explain briefly how new bitcoins are created through a process called mining, where powerful computers solve complex mathematical problems to validate and add transactions to the blockchain.

5. Decentralization

No Central Authority: Highlight that cryptocurrencies operate on a decentralized network, meaning there is no central authority (like a government or bank) controlling or regulating it.  This issue is one of the most highly litigated issues before the courts and the public now.  The SEC wishes to regulate crypto by considering it a security.  If it’s considered a security then all crypto transaccted in the USA would have to be registered.


6. Wallets

Digital Wallets: Introduce the concept of digital wallets, which are software programs that store cryptocurrencies. Wallets allow users to send, receive, and manage their cryptocurrency holdings.  Some of the more popular wallets include Metamask and Coinbase wallets.

7. Volatility

Price Fluctuations: Mention that cryptocurrency prices can be highly volatile, with values changing rapidly. This is different from traditional currencies, which are generally more stable.

8. Use Cases

Transactions: Explain that cryptocurrencies can be used for various transactions, both online and, in some cases, in physical stores.

Smart Contracts: Briefly mention smart contracts, which are self-executing contracts with the terms directly written into code.

9. Risks and Rewards

Investment: Acknowledge that some people invest in cryptocurrencies, but it comes with risks. Prices can be unpredictable, and there’s the potential for loss.

10. Stay Updated

Dynamic Space: Emphasize that the cryptocurrency space is dynamic, and new developments are continually occurring. Encourage them to stay informed if they choose to explore further.


Cryptocurrency can be an intimidating subject to most.  However, as the individual’s learning curve increases the level of fear drastically decreases when it comes to cryptocurrency.  Remember to gauge the individual’s level of interest and understanding as you explain, and be patient in addressing any questions they may have.

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