For those who don’t want to know anything about Bitcoin other than what is needed at minimum to use it:
Bitcoin is a new type of currency that can be used to buy and sell goods online like USD, Euro, Yen etc.
It is not backed by any government or asset.
It is open-source, open for anyone to inspect.
Nobody owns or controls Bitcoin. There is no central Bitcoin server. It is a peer-to-peer network.
Its value goes up and down just like the stock market, depending on demand.
To buy or sell Bitcoins or use Bitcoins to make purchases, you need to create a Bitcoin wallet for example at Coinbase.
In this wallet, you will have a public Bitcoin address. When you sell something, you give the buyer your Bitcoin address and they send Bitcoins to this address. When you buy something, you use the seller’s Bitcoin address and send them Bitcoins by signing the transaction using the private key in your Bitcoin wallet. Most of this is transparent to the user when using a Bitcoin wallet.
Bitcoin is like real physical banknotes. If you send someone Bitcoins, the transaction is final. It’s like handing someone cash. You cannot charge back or dispute or stop payment. Only the receiver can choose to refund your Bitcoins.
Bitcoin has zero or very low processing fees.
You can send Bitcoins to anyone with a Bitcoin address, anywhere in the world.
For the time-being, all transactions are anonymous (to a degree) but in the US, identity disclosure requirements are coming soon.
You can see the latest Bitcoin transactions happening at http://blockchain.info/
For a more in-depth technical explanation, check Ken Shirriff’s article.