Overheard, between Alice and Bob: Bob: I wish Bitcoin was simple, like ordinary money.\u00a0 Alice: I never understood ordinary money. I wish it was as simple as Bitcoin. Bob: What do you mean? If I put money into my bank, at least I know where it is\u2014and what it is.\u00a0 Alice: Really? So if your employer pays money into your bank account, what actually happens?\u00a0 Bob: Well, they\u2019re sending me money, aren\u2019t they? At least I hope they are.\u00a0 Alice: But it\u2019s all done between computers, nothing in the real world actually changes. Bob: No, that\u2019s true. But the difference between that and Bitcoin is that if I wanted, I could ask the bank for cash, and they\u2019d have to give it to me. Then I\u2019d know I had real money.\u00a0 Alice: If everyone did that, the banks would soon run out of cash. Only a tiny proportion of a currency exists as cash.\u00a0 Bob: OK, well even if they couldn\u2019t give me cash they\u2019d still be able to write me a cheque or send me the money online\u2014because they\u2019ve got it.\u00a0 Alice: Again, if everyone wanted to do that, the bank wouldn\u2019t have enough. They lend most of it out and couldn\u2019t get it back in a hurry. They only keep a small amount on hand because they know how much they usually need. It\u2019s called fractional reserve banking. Bob: OK, but these are technicalities. Money is still money and you won\u2019t have any trouble spending a U.S. dollar almost anywhere in the world, whereas with Bitcoin, you\u2019d be lucky to do anything useful with it. Alice: They may not be as different as you think. U.S. dollars and Bitcoins both exist on computer networks as records of value transferred from one party to another. So where\u2019s the real money? Bob: Well, I don\u2019t know, but I\u2019d rather have my \u201crecord of value\u201d in dollars, thank you very much.\u00a0 Alice: That\u2019s up to you. But remember when you pay for something on your credit card, it works because your credit card company trusts you to transfer some of that intangible money in your bank account to them. But it\u2019s all just numbers on spreadsheets. In the end, it only works because everyone believes in it. Bob: So what\u2019s wrong with that?\u00a0 Alice: Well, nothing. But I\u2019m just showing you that ordinary money is as intangible as Bitcoin. And the value of both depends on what people think it is. Sterling notes from the Bank of England say on them \u201cI promise to pay the bearer \u00a310\u201d (or whatever denomination the note is). So a bank note is not even claiming to be \u00a310, just a \u201cpromissory note\u201d for \u00a310. But if you go to the bank with it and ask to be paid \u00a310 like it says, they\u2019d just give you another \u00a310 note. So where is the actual money, and not just something that can be exchanged for it? Bob: You\u2019re confusing me.\u00a0 Alice: Good. So you see that \u2018real\u2019 money isn\u2019t as simple as you thought. And it\u2019s pretty hard to say exactly what it consists of. Now let\u2019s turn to Bitcoin. Just like with dollars, value is transferred online in the form of transaction records. That\u2019s what the blockchain records: me paying you for a cup of coffee. The main difference is that Bitcoin doesn\u2019t exist outside of the system on which the transfers are recorded. You can\u2019t keep it under the mattress. Bob: But what about all this \u2018public and private key\u2019 stuff? Why can\u2019t I just have a simple password like I do for online banking or my PIN code at the cashpoint?\u00a0 Alice: You can access Bitcoin very simply, just with finger recognition if you have a Centbee wallet. And if you sign up to Invisible MoneyButton, you can even buy online, up to a value you choose, without having to agree each time. It can be as simple as you feel comfortable with. Bob: Well OK, but it still doesn\u2019t quite seem real.\u00a0 Alice: That\u2019s just a matter of psychology. Don\u2019t you sometimes feel when you\u2019re visiting a new country for the first time and are given a bunch of strange banknotes that they don\u2019t feel like real money? And yet they\u2019re using exactly the same system you\u2019re familiar with, just with different pictures on the notes. So it\u2019s not surprising that Bitcoin doesn\u2019t feel real at first because it is more different than that. But you\u2019ll get used to it too. Bob: I\u2019ll never stop thinking of the dollar as real money.\u00a0 Alice: And I\u2019ll never stop thinking of the dollar as just as unreal as Bitcoin.