Make any part of your body touch the balloon, like your head, hands, legs, etc. The balloon won't pop itself if you did it with your keyboard or mouse, It only pops when you touch it.
To create this game I went to the Ideas section at the top of the blue screen bar and when I scrolled to the bottom I found "Video Sensing" and when you click on it, it will show you how to do a lot more with video sensing.