know-how for children

“Bitcoin, what is that, Mom?” “Dad, what does Ethereum mean?”  Let’s face it: questions like that would throw many of us off our usual paths of financial education. Not necessarily because our kids want to know about cryptocurrencies, but rather because we would most likely run into explanatory trouble. However, we wouldn’t be alone in that either. According to a recent survey by the German IT association Bitkom, 66 percent of Germans believe that cryptocurrencies are too complicated.

So if two-thirds of adults shrug their shoulders when it comes to cyber money, how can you explain these complex constructs to children so that they at least understand the basics? Do parents even need to explain to their children what Bitcoins and the like are all about?

Probably so, because according to the Bitkom study mentioned above, 43 percent of 16-29 year-olds are convinced that cryptocurrencies are a secure alternative to the established monetary system. Either way – and almost all experts agree on this – cyber currencies will not simply disappear again, but will rather play a decisive role in shaping future payment transactions.

Making digital money tangible

“Did you know that Bitcoin’s average daily trading volume of $39.1 billion is higher than Apple, Amazon, Microsoft, Alphabet, and Facebook combined?” Interesting information, but not very helpful in explaining to children what cryptocurrencies or cybercurrencies or cyber money actually are, where they come from, how they work, and what opportunities and risks they pose.

Yet it’s actually quite simple, isn’t it? Cryptocurrencies are basically digital money. There are now around 1,400 of them and, in principle, all of them are “produced” in the computer via certain encrypted calculation paths, i.e. virtually via a digital money press that can be operated by anyone who has the corresponding hardware and software and also authorization. This cyber money can then be bought, transferred and spent by anyone who has a digital wallet into which the cyber money fits. So far, so true, at least in broad terms.

But would such an explanation really help a child to be able to open up the world around Bitcoin, Ethereum, Ripple and Co? On the other hand, most children have already come into contact with digital money here and there.

Let’s just think of already established and widespread digital payment models such as PayPal, which children also somehow “know” when they watch mom and dad shopping and paying online. Or let’s think of our Finny Family app, which allows parents and guardians to pay out pocket money to their children in cash or digitally via bank transfer using the Finny Kids app.

The coins and bills received are visible on the screen, amounts of money have a currency in the mobile banking app, and when a savings goal is reached, yes, the money can actually be touched and spent.

Cybercurrencies are different: They simply do not have a form comparable to familiar bills and coins. In the end, they consist only of data. So you can’t touch Bitcoins and the like, put them in a piggy bank, withdraw them, take them in your hand again and simply pay somewhere with them. At least not just like that.

Decrypting cryptocurrencies in a child-friendly way

Price fluctuations, decentralized, secret – these are among the most important buzzwords commonly associated with cyber money. And perhaps at least two of them, decentralized and secret, are a useful mnemonic to help children understand the world of digital currencies.

1. Computer money belongs in the computer wallet

Let’s imagine for a moment that money no longer comes from the traditional bank branch or ATM and is transferred from there to the pocket money account or withdrawn and thrown into the piggy bank. No, the money is computer money, so to speak. Many people have created it together, and it consists neither of coins nor of bills, but of numbers floating around in virtual space. After all, since many people were involved in the invention, this money practically belongs to them jointly.

If mom and dad now want to transfer pocket money in the form of cyber money, they have to do it with the computer. And they can only transfer it if the recipient has a computer wallet. After all, computer money only fits in there. It is also possible to have the computer wallet on the smartphone. This is called a wallet. To prevent someone from stealing money from it, this wallet has a lock: a secret code. And crypto, as we know, means “secret” or “encrypted”.

2. All control the cryptocurrency

When pocket money is transferred, everyone else who also has this computer money checks whether mom and dad really have enough money to transfer the pocket money. If everyone else agrees to the transfer, the pocket money goes into the child’s computer wallet.

Who withdraws what and when, or transfers it to others, is constantly noted in a large cash book that can be viewed by anyone at any time and from anywhere. Each entry is made with a pen that cannot be erased or erased with ink eraser, effectively a secret ink. Everyone who owns cryptocurrency also receives an exact copy of this book on an ongoing basis. In addition, the pages of the cash book are held in place with super glue and cannot be torn or separated. This ensures that no one can cheat. So far, so collaborative.

3. Money for control

As with any class treasury, there are some who regularly check that the cash book is really up to date and that all transfers have been correctly noted. Whoever of these “controllers” can calculate the fastest whether everything is correct gets a reward, in the form of cyber money, of course. After all, it takes a lot of effort to keep track of and check all the figures. Finally, the reward, in turn, is written in the big cash book. This is how the available cryptocurrency is increased.

4. Shop with cyber money

In conclusion, the question arises as to what you can even do with this strange money or can you even buy it in the real world. In fact, there are some stores that accept cryptocurrencies. You can then pay with the digital wallet app on your smartphone, where the virtual money is located.

More Crypto links (also for the ears):

  • In the BBC podcast The Missing Cryptoqueen, journalists Olivia and Alex Bowen trace the crypto hype with a forensic eye.
  • On Coinmap cryptocurrencies, their histories, opportunities and risks are mapped.
  • The Bitkom study on Bitcoin & Co is available here


Finny does it digitally

As the first mobile banking app for children aged 7 – 12, the Finny Kids App combines the virtual world of money with tangible financial knowledge and real money in the Finny money box. Children can visualise their savings goals and clearly define the way to achieve them. In doing so, they, like their parents, have an overview at all times:

  • How much money is in the savings account and in the Finny bank?
  • What has been taken out?
  • How much has been deposited or put in?
  • Furthermore, children can supplement their pocket money by doing household tasks.

Exciting financial tips help parents in the follow ways:

  • Explain to their children in a fun and age-appropriate way where money actually comes from
  • How to save, multiply and spend money consciously.
  • In addition, parents can quickly see their children’s level of learning and deepen missing financial knowledge here and there.

With Finny Community, grandparents, godparents, uncles, aunts and friends can become part of the Finny family, contribute something to their pocket money and help their children reach their savings goals more quickly.

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