The Bitcoin, in case you haven't heard the news yet, is the world's first decentralized, peer-to-peer virtual currency that has recently rose into prominence. Exchanged directly between individuals and free from government regulation, Bitcoin represents an ideological endeavor aiming to solve present currency issues and lay the foundation for a safe, simple and reliable monetary system.
Developed by an anonymous Japanese student under the pseudonym Satoshi Nakamoto, Bitcoins hold no intrinsic value, building on the idea that money should only be a medium for exchanging goods. They rely on a novel mechanism that allows them to accumulate value through peer-to-peer networks -- they cannot be stolen, forged or artificially inflated. All transactions using Bitcoins are untraceable.
While it is still premature to assess the long-term impact of such crypto-currency systems, Bitcoin is in high demand at the moment. Reputable retailers have adopted Bitcoins in addition to conventional payment options, and several web service providers are offering services in exchange for them. This infographic by Confused explains in simple terms what Bitcoin is and how it works: