Quote from: vnvizow on March 22, 2014, 05:43:25 AM

Best solution is a video, such as these:
http://www.youtube.com/watch?v=j7opj5-32hw
http://www.youtube.com/watch?v=Lx9zgZCMqXE
http://www.youtube.com/watch?v=Um63OQz3bjo

I'd recommend having them start with this video instead (Erik Voorhees' "Bitcoin as Money" talk).

https://www.youtube.com/watch?v=H2YllvbJo6g

It's much more important to understand the why of Bitcoin (i.e., why a decentralized, digital currency is useful) than it is to understand how bitcoin achieves that result. People use technology all the time without understanding how it works, but they can usually appreciate why it's useful / valuable.

I've also gotten some pretty good feedback on my standard explanation:

Quote

The reason it's so hard for most people to understand Bitcoin is that most people don't really understand money. Money isn't wealth. It's an accounting system used to facilitate the exchange of wealth. (The paradox of money is that while everyone wants it, no one actually wants it - they want the stuff they can buy with it!) Many people are put off by the fact that bitcoins are "just data." But that's what ALL money is, information! More precisely, money is a means for credibly conveying information about value given but not yet received (or at least not yet received in a form in which it can directly satisfy a person's wants or needs).

To put it yet another way, money is a ledger. With fiat currencies like the dollar, that ledger is centralized. And that gives the central authority responsible for maintaining that ledger tremendous power -- power that history has proven will inevitably be abused. With Bitcoin, the ledger is decentralized. And that means that no one individual or entity has the power to arbitrarily create new units (thereby causing inflation), freeze (or seize) your account, or block a particular payment from being processed. We've had decentralized money before. After all, no one can simply print new gold into existence. And the "ledger" of gold is distributed because the physical gold itself (the "accounting entries" in the metaphor) is distributed. But with gold, that decentralization comes at a heavy price (literally). The physical nature of gold makes it hugely inefficient from a transactional perspective.

Enter Bitcoin.

It is the first currency in the world that is BOTH decentralized AND digital. It is more reliably scarce than gold (it is mathematically-guaranteed that no more than 21 million bitcoins will ever be created), more transactionally efficient than "modern" digital banking (Bitcoin enables nearly-instantaneous, nearly-free transfers of value to anyone, anywhere in the world) and enables greater financial privacy than cash. It could certainly still fail for one reason or another, but if it doesn't, it has the potential to be very, VERY disruptive.