I would focus on two ideas:

How are bitcoins created?

Everyone on the network competes to be the first solve a computationally hard puzzle. The winner is rewarded with 50 new bitcoins. Puzzle difficulty is automatically adjusted so it takes about ten minutes to get a solution, creating a slow, manageable increase in the supply of bitcoins. The 50 bitcoin reward gets halved every four years, so the total number of bitcoins that will ever be created stays under 21 million.

How are bitcoins transferred?

Bitcoins are associated with cryptographic public keys controlled by the person who owns them. To transfer them to someone else (i.e. to make a payment) he broadcasts on the Bitcoin network a digital signature identifying the bitcoins he is transferring, along with the public key of the new owner. This information is stored in a distributed database maintained by the Bitcoin network that records the public keys that own every bitcoin. Bitcoin software validates the digital signature and updates the database to record the new owner of the bitcoins. He will then be able to transfer them to someone else in the future.


Note that I am not trying to explain how these two ideas are connected, via the block chain. That's just too hard to get across quickly.

forget mining. It's too much of a hang-up for new people when it's a minor thing (for them). If they need to know more they can do research to find out.


Maybe you don't realise how technical sounding that is. Let me highlight all the problem language:


And it's very hard to follow.

I'd rather pick 4 core ideas, forget everything else and drive those sole points home. No need to talk about the distributed blockchain, public keys or mining.

It's just like a normal bank, with the folowing differences:

- there are several bank accounts per person.  You can actually create as many bank accounts as you want.
- accounts are anonymous.  Nobody can know who own a bank account, unless you publish the account number and declare it is yours.
- owning a bank account consists of having a mathematical key associated to it.  This key allows you to transfer bitcoins from this bank account to another.  You must keep this key secret and store it on your PC.
- all transactions between bank accounts are public.  Every transaction is stored on everyone's PC.
- every 10 minutes or so, someone is elected to play the role of a central bank.  He clears the transactions, checks balances, and creates a few new bitcoins for himself.

I doubt I could make it less technical.