Bitcoin is a peer-to-peer digital currency. Peer-to-peer (P2P) means that there is no central authority to issue new money or keep track of transactions. Instead, these tasks are managed collectively by the nodes of the network. [bitcoin.org]
I've read a number of articles about Bitcoin recently so I decided to give it a try. The concept is simple: a new currency which you store locally and manage transfers yourself, making it a lot more secure. The implementation is hugely complex and my brain hurts every time I try and get my head around the entire thing.
I have set it up on a couple of boxes, used the Free Bitcoin Dispenser to get my first batch and transfered funds between my accounts for fun. I am currently waiting for those transfers to go through, I assume it's taking forever since I am stingy and chose not to pay a transfer fee... so now what do I do? I have a total of 0.05 BTC, which is pending transfer, so I can't touch it. Looking around for ways of getting more and the result is, you either need to pay real money, have ridiculous CPU power, or be lucky and wait for a couple of months/years.
But it's not all a waste of time, there is a long list of places that provide and accept Bitcoins for virtual and physical products and services. There are conversion sites which allow you to purchase Bitcoins with "real money", and convert your Bitcoins back to $$. I even found a Mac Store in Canberra which accepts Bitcoins (pity I'm not a mac user...). Operation Fabulous is an advertising platform which pays in Bitcoins, so I have signed up to see what it's like - checkout the ad on the bottom of the right sidebar (on the main page).
Transfering money is a simple matter of obtaining a bitcoin address from the person you wish to pay. Users can generate as many of these as they like and they are anonymous. One of mine is: 125MiwB8pPs6haEp63y2hyHdb32VUJAFRR (feel free to donate me some bitcoins!). Using command line tools, it would be simple to create an address for each client/biller and monitor which payments appear automatically.
So yeah, I think the concept and technology behind bitcoins is great but unless you have money to play with you won't get much out of it initially. But it may go somewhere good in the future...