I will give it a shot.
It was designed to allow parties to transfer value between them without having to use an intermediary.
In order to do that, there needs to be a method of “verifying” who we are, and that we have the store of value needed to make that exchange. The process of verification is called the block chain. It is public, and it verifies through a series of calculations.
So, if I am selling something and you want to buy it, you could use cash, a check, a credit card or bitcoin. (For this argument at least.). Well, the Fed could print up a whole bunch of cash, making your cash lose value. Your bank and my bank are going to make money off a check or credit card transaction. Banks are safe, so I will get my money eventually. If I sell you something for $10, I will get something like $9.95 in my checking account in 2-5 days. Your bank verifies your trustworthiness.
With bitcoin the transaction goes like this: we settle on a value (or use the current value at an exchange). I give you my public address or key. You send me the value of bit coin attached to YOUR key. The block chain verifies who we both are, and updates the ledger.
This confirmation is done several times as the network updates around the world.
I can instantly convert the bitcoin to dollars if I want, or I can retain them.
One of the key parts of bitcoin is that the fees are usually pretty low when compared to banks and international settlements. Another key is that bitcoins are limited in the number of coins that will ever be available. So there is no inflation of coins.
It is not run by a central bank. It is not “backed” by the full faith and credit of anyone other than the users.
The bitcoins themselves cannot be “hacked.” Exchanges and online “wallets” can be. But this is no different than someone finding your credit card and spending your cash.
Some of these things are good. Some may make you leery.
Personally, I see the value in the technology behind bitcoin. Bitcoin is simply the toll that gets you a place on the highway.
In terms of long term development, it is in its infancy. It is very speculative. And it can swing like hell from one direction or the other.
I hope that gives you a sense of what this is.
How?