At the bottom of your hair is something called a hair follicle. This is what makes hair. They also contain pigments that give our hair its colour. As we get older the cells in the hair follicle are damaged, much in the same way that skin is (this is what causes wrinkles). This damage also causes a decrease in the pigment.
Grey hair is basically hair with no colour, as there is no more pigment left in the follicle.
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