Bitcoin is what’s known as a “cryptocurrency,” a digital coin that buyers and sellers of goods and services can use to undertake transactions over the Internet such as restaurant bills and tuition fees. Bitcoin is not the only such cryptocurrency—Ethereum is another example—but it’s probably the best known.
One acquire Bitcoins in one of several ways: as payment for goods or services, by purchasing them at a Bitcoin exchange, by exchanging them with a willing partner, and through what’s called competitive mining, which involves using special software to solve math problems. They are stored in one’s encrypted online “wallet” and transmitted via a “blockchain” when a transaction is consummated, assuming the price of the good or service does not exceed the buyer’s available balance. One can convert Bitcoins to cash if another party agrees to buy them.