This is an excerpt from The Breakdown newspaper. To read the full article, register.
I don’t understand. I still don’t understand.
– Tom Hanks, The main thing
At a dinner last night, I was asked to explain crypto to someone new to the topic who had never heard of Ethereum.
I did a terrible job.
From testing proof of value concepts, to smart contracts, to DeFi, to DePIN and back to what blockchain is, I’m sure I’ve left my audience more confused than I found them.
It was a reminder that the best person to learn from is usually one step ahead of you on the topic, not 10 or 100 – or someone who thinks about a lesson twice a year, not every day.
For example, technologist Ben Thompson, who mentions crypto in his books Stratechery newspaper about twice a year, explains why it is more important than any crypto experts who think about everyday.
Thompson begins helpfully at the beginning: “Blockchains are the idea that different groups can cooperate without any kind of central authority.”
This fragmentation allows crypto to have “all the qualities” of digital assets – infinitely replicable, universally available, easily distributed – however, it is “limited.”
Thompson thinks this is interesting because it solves a problem he faces as a digital columnist: “Digital content is very difficult to monetize because it’s repetitive.”
In practice, however, they realize that crypto is more interesting as a means of sending money to peers – which is why the issue that creates crypto often involves stablecoins.
Stablecoins, he says, represent “all the things of the Internet” that he finds interesting – global records, scarcity, fast sales – and there are no “downside things”: “good ideas about money go up, wild changes in price.”
Net-net, “what you get (with stablecoins) is basically a currency that works like the internet.”
That’s the definition I needed for dinner last night: Crypto is a currency that works like the internet.
Thompson also explains why this is useful for fintech businesses he often writes: “If you want to set up a financial institution, you don’t have to create a backend to track everyone’s money… you can just build directly on top of the blockchain.”
This allows fintechs to “offload” all the complex financial aspects to the blockchain: holding money, reconciling accounts, keeping a ledger of transactions, and – perhaps most importantly – establishing trust.
“You get everything for free with blockchains.”
His neighbor at dinner – a real estate agent – would certainly see his appeal.
Thompson’s explanation, which was already given in 2024, feels very important at the end of 2025: The prices of tokens are low, but traditional financial companies – such as Stripe, BlackRock and Visa – are very happy to download parts of their business to blockchains.
Thompson’s podcast will help you explain why.
A central post from 2013 provides the best introduction I’ve seen to what Bitcoin is and why it matters – and your chance to explain it to newbies on holiday.
The author begins on a park bench, using a simple exchange of apples to explain the main purpose of blockchains: production. digital apples act like flesh.
These blockchains, he says, “live in everyone’s computers (so that) all the events that have been happening, since all time, in digital apps will be recorded.”
Because of this, sending one of the apples “is like seeing a real apple leave my hand and fall into your pocket.”
It’s as unauthorized as swapping real apples: “Like on a park bench, the swap was just two people. You and me – we didn’t need Uncle Tommy there to prove it.”
Uncle Tommy is a banker, yes.
This configuration creates a false definition of proof of work: “You can participate in this network and change the ledger and make sure everything is done. For this problem, you can get 25 digital apples as a reward.”
It also explains the concept of scarcity: “In fact, it is the only way to create digital apples in the system.”
With all that has been established, Bitcoin is clear: “The system I described is available Bitcoin protocol. And digital apples that is ‘bitcoins’ in the process.”
This makes cryptocurrencies near-continuously distributed and instantly transferable. Either way, no permission is required.
But that’s not all blockchains can do: “I can even create other digital products to climb above of these digital apples! It is digital after all. Maybe I can add another word – a digital pen. Or I can tie the most important things; like say a contract, or a stock certificate, or an ID card…”
Perhaps disappointingly, crypto is now – 12 years later – starting to put certificates and ID cards on blockchains.
But now that it is finally happening, you must be ready to explain how and why.
In the classic film The main thingJosh (Tom Hanks) is promoted from data entry to vice president of product development after just two weeks on the job – all because the CEO is drawn to his childlike wonder for the toys he makes.
Josh jumps straight to the top because he has the unfair advantage of being a child trapped in a man’s body – this gives him an insight into the toy company that no toy expert can match.
In a high-profile meeting with the adults, he responds to the pitch of a toy house that turns into a robot as any child would: “I don’t understand.”
After explaining the business, he scoffed, “I still don’t know.”
His line of questioning and childlike thinking leads to a brilliant idea: a robot that turns into a giant bug.
Josh’s method is not unusual.
The Zen concept of shoshin – to be open-minded, willing and free from prejudice in learning – from the 13th century.
“In the mind of the beginner there are many possibilities,” the Zen master wrote. “In the opinion of experts they are few.”
This can be the best way to learn about a complex and mysterious topic like crypto: Approach it with the open mind of a beginner.
Fortunately, you don’t have to be a Zen master to practice shoshin (or be a 12-year-old boy) – you just have to channel Tom Hanks..
The next time someone explains the complexities of crypto to you (such as auto-deleveraging or quantum resistance, to name recent examples), don’t think you have to understand it right away.
Instead, say, “I don’t understand.”
And then, after the second explanation: “I still don’t understand.”
By answering the third or fourth, you’ll probably get it – maybe even better to explain it to me.
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