A very good explanation of Bitcoin and how it works can be found at https://multibit.org/faq.html. The beginning of the FAQ at the above address reads: Hi! I'm new to this Bitcoin thing. I'm not technical and I have a lot of questions...

Ask away. Bear in mind that there is a lot to learn, and I cannot give you financial advice. What is Bitcoin ?

Put very simply it is a new form of money that works extremely well on the Internet. So it's a "virtual currency" ?

No. Virtual currencies are generally tokens issued by a company for near-exclusive use on their site. Examples include loyalty or gift cards, air miles or mobile phone top-ups.

Bitcoin is a general purpose digital currency. It is programmable money.

Nothing like Bitcoin has ever existed before.

In a similar way that email revolutionised the postal service, Bitcoin can revolutionise financial services.

Continue reading at the above link.