Bitcoin is an accounting ledger that is distributed over a peer to peer network. Bitcoin addresses are essentially very large random numbers -- so anybody can make up and use an address without the permission of anyone. The insanely large amount of possible addresses makes it nearly impossible that two people would select the same one -- and the cryptographic systems assure the person who generated the number and the associated keys can move the money.

It allows people to trade goods and services with one another without a bank or payment processing company facilitating the transaction. Because it is peer to peer, and only exists in the virtual world, it is very difficult for governments (Good or bad) to interfere with or block these transactions. Governments cannot seize this money without having access to the keys.

The disadvantages to bitcoin at present are that many computers are infested with viruses and malware -- Insecure machines do not do a very good job of keeping keys private - and thus bitcoin can be stolen by hackers who manage to steal your keys .. Bitcoin is volatile -- It isn t used enough yet to have big buys and sells not effect the price.. It is also fairly difficult to purchase -- as it is not widely used yet, and companies find it difficult to know what financial regulations apply to bitcoin and which ones don t.. It is very expensive to be wrong.

In the end many of the disadvantages will be mitigated -- but it isn t ready for grandma to use yet. Still on the nerd bleeding edge..

I am confident it will change the world though in one form or another..