What is Bitcoin and How Does it Work?

It's hard to deny that Bitcoin is changing the way we use money, and our concept of how currency should work. So what is Bitcoin exactly? 

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Credits: 

Photo of different currencies: 
http://simplecurrencyconverter.blogsp...

Decentralized/Centralized Illustration: 
Mashable composite. iStockphoto, betamax; nicoolay; johnwoodcock; retroimages; aristotoo; 4x6; Patrick Damiano

Blockchain: 
Courtesy of Silicon Angle; Blockchain.info

Miner 1:
http://bitell.sinaapp.com/show.php?ti...

Miner 2:
http://bitcoinexaminer.org/20-insane-...

Miner 3:
http://www.openmobilefree.net/?p=1308 

Bitcoin Stock Video:
iStock, Movie Elements

Bitcoin Stock Photo:
http://www.coindesk.com/information/w...

Bitcoin Creation Rate Chart:
Wikipedia

Bitcoin ATM: 
ABC 10 News
http://www.10news.com/news/worlds-fir...

Bitcoin Value Graph: 
Blockchain.info