Bitcoin is a payment system introduced as open-source software in 2009 by developer Satoshi Nakamoto. The payments in the system are recorded in a public ledger using its own unit of account, which is also called bitcoin. Payments work peer-to-peer without a central repository or single administrator, which has led the US Treasury to call bitcoin a decentralized virtual currency. Although its status as a currency is disputed, media reports often refer to bitcoin as a cryptocurrency or digital currency.
Bitcoins are created as a reward for payment processing work in which users offer their computing power to verify and record payments into the public ledger. Called mining, individuals or companies engage in this activity in exchange for transaction fees and newly created bitcoins. Besides mining, bitcoins can be obtained in exchange for fiat money, products, and services. Users can send and receive bitcoins electronically for an optional transaction fee using wallet software on a personal computer, mobile device, or a web application.
Bitcoin as a form of payment for products and services has seen growth,and merchants have an incentive to accept the digital currency because fees are lower than the 2-3% typically imposed by credit card processors. The European Banking Authority has warned that bitcoin lacks consumer protections. Unlike credit cards, any fees are paid by the purchaser not the vendor. Bitcoins can be stolen and chargebacks are impossible. Commercial use of bitcoin is currently small compared to its use by speculators, which has fueled price volatility.
Bitcoin has been a subject of scrutiny amid concerns that it can be used for illegal activities. In October 2013 the US FBI shut down the Silk Road online black market and seized 144,000 bitcoins worth US$28.5 million at the time. The US is considered bitcoin-friendly compared to other governments. In China, buying bitcoins with yuan is subject to restrictions, and bitcoin exchanges are not allowed to hold bank accounts.
If you want to know more then check out the full Bitcoin Wikipedia article
Bitcoin is a digital currency
Bitcoin came to life in January 2009
The creation and transfer of Bitcoin is based on a cryptographic protocol
All Bitcoin transactions are recorded in a public ledger called the block chain
Bitcoins are transferred through a peer to peer network
You can store your Bitcoins in a digital wallet
Mining is the process by which new Bitcoins are created
The number of Bitcoin is limited to 21.0 million
Each Bitcoin has 8 decimals which means that in total there are 2.1 × 1015 or 2.1 quadrillion currency units
Until today about 11.5 million Bitcoins have been mined
More about the Bitcoin wallet
Your Bitcoin wallet is the place where you store your Bitcoins
Be careful with your wallet – it’s where your money is
You can either have a Bitcoin wallet installed locally on your computer or smartphone – choose one of these
You can also use an online wallet such as the one from Blockchain.info
There are also ways to create paper wallets but this requires more technological insight. I will post more links here later
Generally it’s good to have your money distributed over more than one place – but don’t forget to keep track of where your Bitcoins are!
Advantages of Bitcoin as a currency
Fast money transfer
Very low cost money transfer
Frictionless international money transfer
No double spending
No money printing possible
The short list below is a collection of links to the most important Bitcoin websites. You can find a more comprehensive list of Bitcoin knowledge sources under Wiki Bitcoin.
Official Bitcoin website – this is where you can download your wallet and find further information
Dedicated Bitcoin wiki – one of the best detailed resources, covers also technical questions
Bitcoin Foundation – is there to standardize, protect and promote Bitcoin
bitcoin charts – price information of Bitcoin exchanges all around the world