Bitcoin is a digital person to person "currency" which unlike conventional currencies, such as dollars or dollars, is not issued or regulated by a central bank or a supervisory authority.
All transactions are public and stored in a database that are open for everyone in the network. Cryptography assures security, and an easily accessible history allows the money to be used only by the owner and not several times.
A transaction is not valid until it is broadcast to others in the network, and recognized in a collective list of transactions called the blockchain.
The idea is that transactions can take place almost anonymously, and without the authorities being able to intervene.
Bitcoin is issued by powerful computers solving difficult algorithms that confirm transactions, these players are called "miners", or digital mining.
There are only 21,000,000 bitcoins that can be created, and now there is about 17,000,000 that are in circulation.