(I just posted this to
http://dataplumber.blogspot.com/2013/03/bitcoin-elevator-pitch.html , but I thought I'd post it here too, for comment)
(For those that are unfamiliar with the term, an "elevator pitch" is a description of a product or company or service that's concise enough to be delivered while on an elevator-- under a minute.)
There's a lot of people struggling to describe Bitcoin concisely, myself included. So, I tried to put together a description of Bitcoin that is understandable by an unsophisticated audience, with a few prepared responses to obvious questions. I've avoided expressions like "public keys" but snuck in the concept of "private keys" as such, because it works, semantically.
Please chime in, in the comments, but remember that you can't give a complete description of anything in an elevator, so I'm shooting for good, not perfect.
*cough*
Elevator pitch:
"Bitcoin is a global digital currency that works on the Internet and is peer-to-peer with no central control. It allows transfers from anyone, to anyone, at any time, near-instantly, with negligible fees, and no third-party (government or bank or corporation) control. Bitcoin is like digital cash-- transactions can not be reversed, as there is no central authority to adjudicate disputes."
Q: If there's no government backing it, why does it have value?
A: Its inherent value is in its ability to store and transfer value from anywhere to anywhere with negligible fees and no borders. (You can transfer funds now via international wire transfer, but the red tape can be exhausting, the exchange rates frustrating, and wire is just not suitable for smaller/personal transactions.) While gold has some inherent value for industrial applications, 90%++ of its value comes from the fact that it's (a) scarce, (b) easily recognizable, (c) highly divisible, and (d) very transportable, all of which are important features of money. Bitcoin has all of these features, but takes "very transportable" to a place never previously imagined.
It's worth noting that USD and other fiat currencies don't really have anything backing them, either. The "gold standard" went away long ago, and the only inherent value left is the emotional value that we assign to it, which is our belief that it will probably still be worth most of its value tomorrow. It's also important to note that because of the enforced scarcity of Bitcoin, Bitcoin will tend to hold value over time (like gold), instead of leeching value away over time (like fiat currencies, which can be printed at will.)
Q: What if the government shuts it down?
A: There's no central place to "shut it down". The gov't would have about as much luck as the music industry did shutting down Bittorrent. That being said, the US Govt has acknowledged virtual currencies and (so far) simply wants businesses that convert Bitcoin to USD and back to implement money laundering controls just like any other business that converts currencies. If you're not moving more than $10k at a time, you probably don't care.
Q: How does it work?
A: The database of all Bitcoin transactions ever completed is shared by all of the participants of the Bitcoin network. A group of people known as "Bitcoin miners" continuously audit the transactions and bundle them into "blocks" that are protected by cryptography so that Bitcoin transactions can't be reversed, and coins can't be spent twice on the network. (Your Bitcoin always exists on the network, but the secret, private keys that allow you to unlock your coins and spend them are kept by you: either on your computer or phone, or backed up on a flash drive or piece of paper. How safe your Bitcoin is varies directly with how well you protect those keys.)
Q: Is it safe?
A: Relative to what? Recent events in Cyprus show us that banks are not safe. And even if they were, governments can step in and seize your money arbitrarily, and if done without cause, a lengthy court battle will be required to release your funds. Even if they don't take your money outright, the government will leech away the value of those stored funds over time, via inflation.
Any funds you have in Bitcoin are controlled only by you, but the burden of securing those funds falls on you, too. One should be especially cautious of leaving Bitcoin keys on a computer that's used for general browsing, or shared with family members or friends. For the especially cautious, solutions exist for keeping your private keys entirely offline, where you have to "sneakernet" transactions from the offline computer to the online one in order to complete a payment. As with all things, there's a tradeoff between security and usability.
Also, because Bitcoin only has a market value, if that market loses confidence in the value of Bitcoin its real value will go down. It's a fairly new currency, and if you plan on using it as a long-term store of value, it should be considered (at this time) a high risk investment.
Q: What can I use it for?
A: While Bitcoin is still in its infancy, new point-of-sale merchants are springing up every day that accept Bitcoin. Some online merchants already do, and services are available that will accept Bitcoin and buy on your behalf just about anything available online.
(Are there any other questions I should add here?)
