Bitcoin is made up of a digital unit of currency (often designated as “bitcoin”) and an open source, peer-to-peer trading/payment protocol/network (referred to as “Bitcoin”), which is used to exchange the units. Bitcoin is similar to other forms of currency—the U.S. dollar, the euro, the yen—in that it can be used to purchase certain goods and it possesses a market price. At the time of publishing, one Bitcoin is worth $6,751.
However, the difference between regular, flat currencies and bitcoin is that bitcoin is not regulated by governments or controlled by banks. People trade bitcoins with other people, without the assistance of a third party like Paypal or MasterCard, and the market prices for bitcoins are determined by exchange websites. The price has been known to fluctuate greatly over the years, and the volatility has spiked tremendously in the past year.