While we are teetering dangerously into some internet concepts I admittedly have no expertise in, Megan Brown explained Bitcoins while writing for my legal alma mater's weekly in an article published late last year:
"Bitcoin is an example of a digital currency, a monetary system that stores value and can be exchanged on the Internet. While it is in some respects similar to the virtual currencies of some online games — such as the Linden Dollar in Second Life — Bitcoins can purchase real goods in the real world.
After downloading the Bitcoin software, a person can acquire Bitcoins in two ways. One can either “mine” Bitcoins or purchase them at an exchange, akin to exchanging US dollars for a foreign currency. “Mining” Bitcoins refers to creating a new algorithm to verify past Bitcoin transactions in return for a small number of new Bitcoins.
No central authority like a central bank or clearing agency regulates the use of Bitcoins. This makes them appealing to those who disapprove of the role central banks play in monitoring the monetary supply."
Brown also notes that the founder of Bitcoin has gone by the pseudonym Satoshi Nakamoto since creating the peer-to-peer network in 2009.
At this time, it is unclear to me whether Bitcoin is a practical alternative for anything other than niche, small-scale web-based transactions. It is also a concept which would seem ripe for nefarious interference. That said, it is certainly intriguing and I will be sure to post on any interesting updates I see.
UPDATE: For those of you on Twitter, @DigitalCashNews is a good source for the latest news on this topic.