When I talk to people about Consensusland, my book about a country that runs on cryptocurrency, the first thing most people ask me is “what’s cryptocurrency?”
You’d be surprised about how non-mainstream this stuff is.
For a while I had trouble with my answer. A decentralized, consensus-generated token operating on a cryptographically-secure, time-stamped, public distributed ledger with no central issuing authority? Internet money? Rat poison squared? Venmo without a bank?
No matter how I said it, I got the same reaction. Blank stares and bewilderment.
I stopped trying to explain.
Then I found an analogy that makes a little more sense. Not sure it’s the best, but…if you know a better way to explain this stuff, I’d love to hear it. Here’s my try:
Cryptocurrency is a ticket to a blockchain that lets you do something impossible to do with the money in your pocket. Each blockchain does something different. For example, bitcoin’s blockchain lets you send money to anyone, anywhere, anytime, for any purpose, in massive or tiny amounts with certainty that your payment will always go through, you will never need to bribe anybody to send your money, your money will never be counterfeited or faked, your money will never get lost in transit, and you do not need to share any personal information. There is no other way to send money that accomplishes all those things.
To use bitcoin’s blockchain, you need bitcoin. It’s your ticket to the blockchain.
Other blockchains do different things and need different cryptocurrency. When you want to advertise to users of the Brave browser, you need to buy BAT. That’s your ticket to the blockchain that powers the Brave browser. When you want to get crowd-sourced market predictions, you need to buy CND. That’s your ticket to the blockchain that the Cindicator bot runs on.
This is a very non-technical oversimplification. My point is: if you value what those blockchains can do, you will value the cryptocurrency.
My best analogy is Dave & Buster’s tickets. For those unfamiliar with Dave & Buster’s (D&B), it’s an arcade found in some malls and shopping centers in the U.S.
You need D&B tickets to play their games. When you play, you win reward points that you can redeem for prizes or save for the next time you go to D&Bs. You can also buy reward points directly with cash.
Inside D&B, you can only use your tickets and rewards points. You can’t use money.
Outside D&B, your tickets and reward points are useless.
Likewise, cryptocurrency only has value when you’re using a blockchain. If you value that blockchain, you will value the cryptocurrency — the same you will value Dave & Buster’s tickets if you value D&B’s games and prizes.
This will not make sense to some people, but it will one day seem totally normal to them. At least as normal as paying $50 to spend two hours playing games for reward points that have no cash value, can’t be resold, and can only be spent on over-priced prizes from a single company.
Also published on Medium.