This is an opinion editorial by Dave Birnbaum, the product director at bitcoin investing platform Coinbits.
Bitcoin is becoming increasingly relevant to everyday people as financial crises prompt discussion about how to improve our systems of finance, banking and government spending. Although the prevailing wisdom is that it’s better to get people to just use it and put off most of the learning until later, adoption will be more sustainable if people understand why Bitcoin is important, not just why it’s convenient.
Bitcoin Is Not Equivalent To Traditional Financial Services
The argument in favor of sidestepping the complexities of Bitcoin and moving straight to experiential learning typically goes like this: Most people don’t know, or even care to understand, how their credit card works. So why should Bitcoin be any different?
On the surface, this argument makes sense. One could indeed use bitcoin without diving into its underlying technology. It’s a digital currency represented by numbers on a screen. You acquire it, store it and spend it. The numbers move up and down — simple as that.
But if you are already familiar with traditional investing, banking and payment apps, and you first encounter Bitcoin without understanding it, you might ask why you need it when plenty of traditional financial apps do the same thing. The system works, the logic goes, so is Bitcoin a solution in search of a problem?
This runs the risk of Bitcoin being interpreted by users as comparable, or even equivalent, to current financial services. Abstracting Bitcoin to the degree that it feels too familiar could, ironically, act as a drag on adoption, because people will have a hard time understanding why Bitcoin offers value to them beyond what they already use.
Of course, as Bitcoiners, we know the legacy financial system functions without the presence of bearer assets. To move money from one person to another, store your savings in a bank or invest in equities, you must partake in complicated custody arrangements with layers upon layers of corporate entities, legal contracts and IOUs. The sum total of these machinations comprises the “financial sector,” a multi-trillion dollar industry that expends enormous amounts of resources, and extracts overhead, to keep it all working.
These convoluted arrangements offer certain protections, such as legal recourse in the case of fraud or theft. However, they also introduce risk — namely, counterparty risk, which refers to the risk that others (counterparties) might make mistakes, become corrupted by political ideology, become compromised by white-collar criminals or hackers, change the way they operate unexpectedly due to regulation or political decrees, or simply be poorly managed to the point that they cease operations. The legal and technical mechanisms used by the fiat system to relieve people of the responsibility to custody their own assets can also be repurposed to prevent them from accessing their money. This is not a hypothetical problem; more people encounter it all the time.
As Bitcoin educators, when we are talking to someone who has been personally affected in one of these ways, it is usually much easier to make the case for Bitcoin. However, a great many people we encounter are comfortable with traditional finance and haven’t been burned by it. For them, a different approach is needed.
Taking A Different Approach
Although the “digital gold” metaphor is overused and far from perfect, I have found that it works well. The gold comparison is apt in that it affords absolute control over one’s funds. To explain this concept I might say something like:
“Bitcoin is kind of like cash, but it’s more like gold. When you own it, you don’t just have a balance stored in a database somewhere. Unlike the money in a checking account, or the credit on a card, or the balance in your Venmo or Cash App, nobody can reverse a transaction, freeze your account, or control how you spend.”
As Bitcoiners, we love to contextualize Bitcoin with macroeconomics and historical examples. However, in early conversations with most people, it is best to avoid discussions about economic collapse or moralistic arguments about debt before letting people experience the magic of their first transaction. Bitcoin is a shiny rock. Take a look, see if you think it’s as cool as we do. Come for the curiosity, stay for the revolution.
Talking about “number go up” is another distraction that is best avoided at first. It introduces an element of sales pressure and promise-making that dilutes the core message. Ultimately, Bitcoiners are looking for fellow travelers who would own and advocate for bitcoin even if it costs them money, not only if it makes them wealthier. By framing the value of bitcoin as distinct from its price, we give new bitcoiners the conviction to ride out market downturns.
Optimizing the balance of theoretical explanation and hands-on experience is tricky, but getting it right and easily replicated is a key gap in Bitcoin education today that we must bridge. Patience is a necessity when navigating this change — not only for newcomers, but for the Bitcoiners as well. We should take care not to flood people with too much information and enthusiasm. Start with why. Then move to just enough hands-on experience that your audience thinks, “I can do this!”
Of course, we want people to be excited about Bitcoin, but excitement comes from understanding. As people grasp the empowering potential of Bitcoin, excitement naturally follows. It’s the confidence of holding your financial destiny in your hands, of not being at the mercy of banks or inflation by government decree, that turns people into Bitcoin advocates and drives sustainable adoption. A minimum-viable knowledge framework can take some of the guesswork out of Bitcoin education and efficiently drive adoption.
This is a guest post by Dave Birnbaum. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.