Bitcoin is an amazing new technology that acts as both a payment network and a currency. It’s like combining PayPal with the Federal Reserve or the European Central Bank, except the accounting of the transactions are publicly distributed across the Internet.
Bitcoin is a new protocol (new if 2009 is still new) that enables peer-to-peer transactions without 3rd party verification. The system relies upon a public ledger that is distributed across all the computers that have Bitcoin wallets and Bitcoin mining operations.
The distributed nature of Bitcoin rids financial transactions of middlemen, namely the banks. Money is based on trust, and currently that trust is centralized with the banking system. Bitcoin takes that trust and distributes it across the Internet and has changed money from requiring trust to requiring consensus.
Consensus is trust with Bitcoin.
To learn more about what Bitcoin is check out these great resources: