Bitcoin is a digital currency that is rapidly gaining popularity because it solves many of the problems of other forms of currency. It's created and held electronically and can be used to buy goods and services or transfer money anywhere in the world. Bitcoin is the first currency to be globally accepted and there is no currency exchange, no minimums, no limits and it does not require a bank account.
Bitcoin was invented in 2008 as a peer-to-peer payment system for use in online transactions. Unlike any prior payment system, bitcoin is revolutionary in that it is not controlled by any government. This designation allows for the achievement of possibilities that have been previously unattainable in the world of finance. Namely, due to the fact that no central authority is responsible for bitcoin, it cannot be debased, controlled or otherwise used as a political tool. Since bitcoin is also a peer-to-peer network, there is no need for a third party or "middleman" to facilitate transactions between a buyer and seller.
Instead of a central authority, the bitcoin transaction network consists of computers around the world running the bitcoin software, which operates the protocol for administering bitcoin transactions. That software can be downloaded and run by anyone, and any computer running the software can join the network. Each computer on the network also maintains a copy of the universal public ledger known as the "block chain".
Why does bitcoin matter? Click here to take a look at the evolution of money.
Can a bitcoin be counterfeited?
A bitcoin cannot be counterfeited. This is because there is a list of every transaction that has taken place and the order in which they took place on the bitcoin network. This list is called the block chain and every bitcoin user has access to this list. Think of this as a form of "checks and balances" for the Bitcoin network. This self-regulatory nature of bitcoin is one of the key aspects of having a decentralized currency - without some form of checks and balances, the whole system falls apart.