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Since its release in January 2009, Bitcoin has seen explosive growth and a rapid increase in price. Following the most recent price surge in the late months of 2013, media coverage has understandably focused on the underlying technology, its applications, and the risks and benefits it poses to society at large. Meanwhile, under the radar, many children have begun to embrace the digital currency which allows unprecedented ability to perform transactions with anyone in the world connected to the internet.

Despite the complicated nature of the underlying technology, some kids are diving in headfirst and embracing it for its unique advantages.

Cryptocurrency

Bitcoin is only the first and most widely known example of a new type of digital currency: cryptocurrency. These currencies use advanced cryptographic principles to allow a decentralized network to manage a public ledger of accounts and transactions without relying on any central authority to vouch for its authenticity. Whenever a transaction occurs within this network it is broadcast to every node, and the network requires no special credentials for anyone to become a node. These nodes keep a local log of all transactions they record and compete to solve a problem before any other node. As soon as someone solves the cryptographic problem, that solution propagates to all other nodes along with a copy of the local transaction log of the node which found the solution. As long as more than half of the network agrees that the log and the solution to the problem are accurate, that block of transactions is added to the append-only ledger known as the blockchain.

Additionally, Bitcoin was released as a fully open-source project, meaning that anyone is free to analyze the code, or reuse it for another venture. While the open-source nature definitely aided the trustworthiness of this new currency (as experts around the world have analyzed the underlying code for any flaws), it also opened the door for a slew of copycat coins to make a small tweak and release a new blockchain with a new brand, development team, and value. Currently there are over 100 cryptocurrencies, and more are being released every day. These new coins offer technical differences (Litecoin), different ideological goals (Namecoin), or simply different branding (Dogecoin).

Kids and Bitcoin

In the face of this technological sophistication, kids have found ways to embrace this new technology for fun and profit. Three preteen siblings known as BitKidz have written a three part book series describing Bitcoin and how it works, with a goal of spreading the knowledge to more kids around the globe. These books are available on Amazon, or at a 33% discount if Bitcoin is used through their own website. Another example of childhood entrepreneurship embracing cryptocurrency is the BTCKid, who has started his own online blog following Bitcoin news and the people involved in this new industry. In addition to entrepreneurship many kids are simply asking for their allowance to be given in Bitcoin, which parents are happy to do because of its unique properties that help teach kids about saving money. Kids know that there is a fixed supply and expect the price of Bitcoin to rise as adoption spreads across the globe, and thus are more likely to save their allowance if it is Bitcoin vs. dollars. When kids do want to spend it there are several easy ways for kids to purchase the goods they want, such as through Gyft’s gift card program or Zeevix which allows kids to spend Bitcoin for digital goods within online games.

Bigger Picture

If these child trendsetters are correct in assuming that Bitcoin and cryptocurrency will continue to spread as adoption increases, educators will need to face a new economic landscape with unique challenges to education. Education experts have long known that physical money is much better for learning than digital money, as every step of abstraction makes it harder for people to know the value of money; indeed it is this same property that guides casinos into making players gamble with chips rather than dollar bills. As digital currency becomes the norm, educators will need to ensure that education guidelines shift to compensate for this abstraction of money.

As with any new technology, a goal for innovators is to overcome new deficiencies by capitalizing on the unique strengths that technology offers. While cryptocurrency certainly poses some risks for children learning about money for the first time, it is possible for a new cryptocurrency to be designed to empower kids to manage their finances, set a budget, and learn about investing first hand. Stay tuned to this magazine for more exciting news on this front!

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