Bitcoin is an idea developed by Satoshi Nakamoto for an independent, fully de-centralized P2P currency. Technical details of how it is generated are described in a White Paper titled Bitcoin: A Peer-to-Peer Electronic Cash System
I have argued (elsewhere) that bitcoin is a deflationary currency. As the user base increases, and the difficulty to generate bitcoins is increasing, each single coin will become more and more valuable.
This may be a good thing for the early adopters, who are sitting on bitcoins and have not spent them. It isn’t good for the stability of a monetary system however, as there is a constant pressure for price changes, which in this case is prices for things, as expressed in bitcoin, will automatically increase.
There is however another point in bitcoin's disfavor. According to a recent article in the trustcurrency blog, bitcoin is
a rube-goldberg machine for buying electricity
quote: In the end, BitCoins create a perverse incentive to consume energy to “create money.” Here is why.
quote:How much energy does it require to mine the average BitCoin? — With my “older computer,” the hash rate averages around 2000 khps on a microprocessor going full-bore consuming about 65W. The current difficulty shows that a new BitCoin can be mined by a computer at this speed on average every 113 days. So, 113 days × 24 hours = 2712 hours. 2712 hours × 65W = 176280 Wh or 176.28 KWh. The average cost of a KWh in the United States is 10.45 cents. So we’re looking at spending $18.42 to create 50 BTC (at the moment). So the electrical cost is about $0.36/BTC.
Not really the greatest incentive to save electricity in times of possible future energy shortage...