Bitcoin is a digital currency and payment system, run by a decentralized peer-to-peer network of computers. Bitcoin was created in 2009 by a programmer or group of programmers under the pseudonym Satoshi Nakamoto.
For the first several years after its creation, bitcoin held limited appeal. In 2013, however, the value of the virtual currency exploded, with prices moving from $13 to over $1200.
Bitcoin is essentially a software program that slowly releases new bitcoins to the network of computers (bitcoin "miners") running the software. The program is designed such that coins become more and more difficult to mine as time passes. The limit of 21 million bitcoins is expected to be reached around 2040. 
John Lothian News Special Report, December 2013