- Each week, our readers vote for their favourite answer and the contestant with the least votes is eliminated
- This week, students share how they would explain cryptocurrency to the older generation
Hello, Grandma. Do you know what Bitcoin is?
Bitcoin is an online form of money. It was invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto.
What’s the difference between Bitcoin and e-payment? Normally, we buy goods or services using money (cash) or e-payment. The second system is usually handled by a company, for example, a bank, which makes a profit in the process.
But Bitcoin is different. There is no company involved. All selling and buying is supported by a group of people using Bitcoins.
Bitcoins are very expensive now. According to reports, one bitcoin is now worth about HK$443,700. At the beginning, they weren’t worth anything.
But experts say we have to be careful about investing in Bitcoin. People have made a lot of profit, but others have lost just as much by buying and selling the asset at the wrong time.
In addition, some have had trouble turning Bitcoin into cash due to technical issues.
It’s not like we can compete with the big players, anyway.
Grandma, I hope my explanation made sense.
Bitcoin is SUPER confusing. Even I had some trouble understanding it, but I’ll try my best to explain it.
You know how you buy something with a crisp banknote and you get a bunch of coins back? Maybe you put them in a pouch or purse. But carrying them around is super irritating. When you try to pay for something, it takes so long to count the coins, and the cashier gives you a sour look when you hand them the pile of change. To cut a long story short, nobody likes coins.
Now imagine if you could avoid notes and change all together, and you could exchange money instantly. Sounds pretty nice, right? That’s what Bitcoin is. It’s a currency you can use to buy things on the internet. No more sagging purses and funny-smelling metal bits, Bitcoin is here!
Although there are other ways to pay without using cash, such as credit cards or PayPal, Bitcoin is unique because its value changes all the time. Since its creation in 2008, Bitcoin has grown like crazy. In 2011, one bitcoin was worth about HK$3. Today, a single Bitcoin is worth more than HK$443,000!
With improved technology, I expect Bitcoin will become a lot more popular – and may even replace cash one day.
Granny: Hey little fella, what’s Bitcoin? I’ve heard so many people talking about it.
Me: It’s a digital currency like Apple Pay which you cannot feel, touch, or place in your wallet. It exists in the computer, and is not controlled by banks or other organisations.
Granny: Not controlled by anything? On the computer? When thieves steal your Bitcoin, no one will be able to help you! If your laptop is stolen or broken, no one’s gonna help you! You’re going to lose everything!
Me: Calm down, Granny. Actually, the information about who owns Bitcoin is stored in multiple locations on a computer network, so everyone can verify it. And no one can claim to own Bitcoin that they don’t really own. So, even if your computer is stolen or malfunctions, you don’t need to panic about the coins flying away.
Granny: This is what I want to know. Is it easy to make money with Bitcoin? I heard that a Bitcoin is worth about US$58,000!
Me: Erm … I can’t tell if Bitcoin is riskier than stocks or other types of investments, but this volatility can also make it more profitable. With Bitcoin, you could become a billionaire, or go bankrupt overnight. It’s quite dangerous, honestly.
Granny: Seriously? Oh dear, how do you know so much about Bitcoin? Are you going to buy some? I’m telling you ... you’d better not!