[quote name=“Kevlar” post=“40180” timestamp=“1386267588”]
Start with pennies as currency. Show how you can trade your pennies for a snickers bar, and use those pennies to pay for some service.
Then show how you can tally who has how many pennies on a piece of paper. Show the piece of paper to everyone.
Ask everyone to make their own copy of the tallies. Go and do some trades, each person recording their trade on their individual record sheet. Show them how the records don’t agree.
Now make one BIG tally sheet for everyone to see, and every time someone makes a trade, they have to loudly and publicly announce it for everyone to hear, and the BIG tally sheet has to be updated by someone. Show how no one can modify their own tally to gain more than they really have because everyone else in the room will cry foul and stop them from making the change.
Now this particular way of doing things is a little cumbersome, so someone named Satoshi Nakamoto invented a technology that allows computers to do it for us. We call this collective technology stack “crypto-currencies”, and each time we make a new one, we give it a name, like Bitcoin, Litecoin, and Feathercoin, but they’re really all the same technology.
The coins are the pennies. They get traded around in exchange for other things.
The big tally sheet is the blockchain. It records who owns what coins, so you don’t actually need to carry copper around in your pocket: To see how much you have, you just look at the blockchain.
The people who are announcing their transactions to the rooms are really announcing them to the network on the internet.
The people who are recording the transactions that people announce to the room, and stopping people from cheating by taking more than their fair share are the miners. They’re getting paid for their services, because every time you make a transaction, you are supposed to donate a small amount to them, but you don’t have to if you don’t want to… and they don’t have to record your transaction if they don’t want to either. So it’s a good idea to give them some, because they are providing a valuable service. They also get lucky sometimes, and find more coins to spend, and this is where the coins come from in the first place: When lucky miners find them, just like when real miners get lucky and find gold in the ground.
[/quote]
This is great. Now we need to arrange a community meetup, play out this exact demonstration, film it, and put it on Youtube. Also, I sort of want a snickers bar now.