Lesson 6: What Is Bitcoin?
Students will be able to define cryptocurrency and explain why crypto is considered “good” money.
JumpStart Standard: There are no Jump$tart standards aligned to this lesson plan
SEL Competency: Social awareness
Hook (5 min)
Check the classroom temperature regarding Bitcoin.
Say: Raise your hand if you have heard of the term “Bitcoin.” Now give me a fist-to-five sign indicating how much you know about Bitcoin (fist represents zero/no knowledge and five fingers represent being an expert).
Ask those students who display 3-5 fingers to share out what they know.
Say: Today we are going to learn more about Bitcoin and cryptocurrency in general.
Presentation (10 min)
Slide: What is Bitcoin?
Say: Bitcoin at its most basic level is money you can send through the internet.
Slide: A little deeper
Say: Bitcoin is:
- decentralized, meaning no entity like a government controls it
- digital, meaning it’s online
- peer to peer, meaning from person to person, without the need for an intermediary like a bank to hold or store it
- a payment system, meaning it goes beyond just the money aspect—it’s an actual system, and you can send and receive money on the system
Slide: And a little bit deeper
Say: So Bitcoin is decentralized, not controlled by the government or a single entity; digital, meaning online; peer to peer, meaning from person to person; and a payment system, so it is both the actual money and the system to send the money.
And Bitcoin runs on a technology called a blockchain. A blockchain is a public ledger or running record of all transactions ever done with Bitcoin. So if Sam sends 1 bitcoin to Evelyn, it would be recorded on a public record across all the computers that run the Bitcoin blockchain. In the next lesson, we will dive deeper into how that works, but for now, that is as far as we will go.
Slide: Some things to know about Bitcoin
Say: Here are a few more characteristics that are important to know about Bitcoin before we explore the possibility of it being money, and even “good” money.
- It is decentralized, meaning no government can control and “print” more, like we see in pretty much every country in the world. Printing more money often leads to inflation and the devaluation of the currency.
- There will only ever be 21 million bitcoin in circulation, so it is scarce.
- To access Bitcoin, you do not need a bank account, which is amazing for the 2.5 billion people in the world who are unbanked. All you need is the internet to access and send/receive bitcoin.
- And finally, it cannot be counterfeited—and transactions cannot be reversed—because once a bitcoin is sent, it displays on all of the computers that are hooked up to the Bitcoin network, also known as the Bitcoin blockchain. So all of the Bitcoin transactions that ever happen are visible on the public ledger on the Bitcoin blockchain. You cannot send money you don’t have, because everything is visible to everyone who is on the network, and there are over 1 million servers on the Bitcoin network verifying transactions (we will talk about this more in the next lesson).
So now, let’s take a step back. Knowing what we know now, some Bitcoin basics, let’s see if Bitcoin is money—and if it is “good” money.
Slide: What is money?
Say: A few lessons ago, we looked at the definition of money. Money is a medium of exchange, a unit of account, and a store of value.
Slide: Is Bitcoin money? Let’s take a closer look
Say: Let’s figure out if Bitcoin is money.
Slide: What is money? (with definitions)
Say: Money is a medium of exchange. Do people use Bitcoin to buy things? Yes they do.
Is Bitcoin a unit of account? Can you break it up into pieces? Yes, you can—one bitcoin can be divided into up to 8 decimal places. If this seems confusing, think about how the U.S. dollar can be broken into tenths and hundredths, like dimes and pennies. Using decimals, this might be expressed as (for example) $1.52—or 1 dollar, 5 dimes, and 2 pennies. One bitcoin can be divided into up to eight decimal places, so 0.00000001 bitcoin can be purchased or sold.
Is it a store of value? Does it hold value in people’s eyes, and is it scarce? Yes—and there will only ever be 21 million bitcoin in the world. So yes, Bitcoin does fit the definition of money!
Slide: Bitcoin = money
Ask: But is it considered “good” money? Let’s look at the characteristics of good money again. Does anyone remember what the five characteristics of good money are?
Share out slide: “Good” money characteristics
Slide: Is Bitcoin considered good money?
Say: Bitcoin is recognizable, divisible, fungible, portable, and scarce. So yes, it is money—and it is considered good money.
Slide: Is Bitcoin considered good money?
Say: Look closely at this slide. This is precisely why Bitcoin has caused such a huge disruption in the world. You can see how people who have knowledge of what makes good money, and are educated in this area, would start to question the legitimacy of the U.S. dollar when an alternative—and maybe a better alternative—is around.
Video (30 min)
Say: We are going to watch a video now from a leading expert on Bitcoin. His name is Andreas Antonopoulos, and he is going to further explain some of the concepts we discussed, but in another way, to really lay a strong foundation for your understanding of Bitcoin. In our next lesson, we will go into the Blockchain technology and the advantages and disadvantages of Bitcoin—but for now, let’s take a step back and hear from an expert.
Exit Ticket (5 min)
Slide: Exit ticket
Pass out graphic organizer from Lesson 2: What Makes Good Money?
Say: Let’s take a moment to complete the “What Makes Good Money?” graphic organizer, or make adjustments if you need to.