The value of bitcoins is not entirely clear ... but it is worth some thoughtful analysis. The old fashioned paper money used to be backed with some valuable metal, and money was both a store of value and a medium of exchange. Now, more than anything, money is a component of a monetary system that has the ability to create money or liquidity as fast as a printing press will work, or better at the speed of light (electrons). This is a powerful tool ... that has the potential to overtake and crush the world's real economy. The chaos in the capital markets since 2007 reflects ... in part ... the ability to create credit without producing the underlying value.

Introduction to Bitcoins

There are two videos here that describe how bitcoins works ... but there are detracters that are linked to the videos at the end of each of these.