Explaining Bitcoin to the Masses: A Glass Box Analogy

Since I first got involved in Bitcoin, I’ve sought a simple means of explaining Bitcoin and the technology that underpins it, the Blockchain, to my friends and family, looking for a simple yet true-to-life analogy that illustrates something so complex. My understanding of the actual technological aspects of them is somewhat limited, so forgive the fact that this analogy inevitably has its own limitations, but I hereby present it to you - the glass deposit box analogy.

Addresses, keys and the Blockchain

One of the first things people ask me when I talk to them about Bitcoin is, ‘if it’s on a computer, what’s to stop someone ‘copying and pasting’ Bitcoin?’ An explanation that wallets hold private keys to public addresses often leaves people confused, so this was the first idea I wanted to confront.

Imagine an enormous 24/7 bank vault. The vault is filled with row upon row of unlabelled deposit boxes. However, each deposit box has a glass frontage, allowing anyone and everyone to view the contents of the deposit box, but not access it. When someone opens a new deposit box, they are given a key that is unique to that box. Making a copy of the key doesn’t double the contents of the box. By the same token, although you own that deposit box, you don’t technically own it, per se, in that it is not in your possession, you merely possess the ability to access its contents at any time.

This is fundamentally how Bitcoin and the Blockchain works. Anyone and everyone can see the contents of everyone else’s Bitcoin addresses. There is no information tying people to their addresses, but everyone is aware of the existence of every address. When someone opens a Bitcoin wallet, they are creating a new address on the Blockchain and the private key that ‘unlocks’ that address. In this way, you can’t ‘copy and paste’ Bitcoin because all you would be doing is making a copy of a key as the wallet on your computer does not actually hold the Bitcoin.

Transactions and beyond

This is where the analogy wavers slightly - the task of conveying the fact that transactions are all publicly accessible and anyone can see that Bitcoin has been transferred from one ‘deposit box’ to another, yet still no one’s identity is revealed is somewhat tricky. I’d love to see your thoughts in the comments about how this could be resolved and how the analogy can be developed further, or if you just hate the analogy altogether - that’s fine too.

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