Writing an article on Bitcoin for my school paper I am writing an article on Bitcoin for our high school paper. What points do you think are important to include?

I'm writing this article for a high school paper, so please put it into those terms.
(NOTE: This answer is meant to be understood at a high school level)

Bitcoin is the first and currently most popular cryptocurrency created by the mysterious Satoshi Nakamoto.

It was designed to allow users to securely and anonymously transmit wealth to each other in a way where no single entity has control.

It is secure because it uses the nearly the same technology that has been used for decades to transmit information securely across the web.  It does this somewhat anonymously because nothing about a user is recorded.  It is "decentralized" (no one person or group of persons) has control because every transaction is verified by "hashing" it in a very difficult and original way yet can be hashed by anyone.  The transactions are hashed into something called the "blockchain" which is essentially a collection of rule-abiding transactions so that a record of all transactions alllll the way back to the very first transaction is available for all to see.

Yes, but what exactly is it?

It's basically a program that everyone uses, originally created by Satoshi Nakamoto.  If someone tries to use a different program or change the original code beyond certain parameters, called the "protocol", all other programs will reject anything that the different program will try to do.

Security

Transactions are secure because a user gets a private key/public key pair generated by a program.  They have to be generated in such a way so that for every private key there is almost certainly only one public key, so a user can choose a random private key, and an acceptable program will generate a corresponding public key.

Once a user has this pair, they can "sign" a transaction with the private key that the user keeps only to oneself, but anyone can view the true data when using the corresponding public key.

The "private key" is more like a "private lock".  A user can create a transaction and lock it with the "private lock" that only the user has while anyone can unlock it with the public key.

The public key is actually the address that all users use to receive coins.  So, if I want to send you money, you give me your public key while keeping your private key to yourself, and I sign a transaction that says "give X bitcoins to okarin's public key" and append my public key to the transaction so everyone can use it to decrypt my message which could only have been sent from me (or someone who stole my private key) because I used my private key to encrypt the transaction.

Anonymity

As long as no one knows who owns a public key, that user is anonymous.  Bitcoin records no other information.

No one controls it

This is mostly true.  Remember, this is all based upon a single program, and someone actually does control the source code to that program.  Whenever it's changed, most people adopt the change, but if they don't, one legitimate transaction record can turn into two: one for the people using the old code and one for the people using the new code.

Aside from that, the program itself is decentralized yet unified because after a transaction is sent out, it is verified by someone else on the network.

This has to be done because if, going back to the example above where I've sent you money, only some people see our transaction but others don't, I could send the exact same money that I sent you a second time to someone else who doesn't know about our transaction.

To prevent that problem, all transactions are included into a single record, the blockchain.  And the longest rule-abiding blockchain is recognized to be the legitimate one.

A single person or group of persons is prevented from having control over the blockchain because a "block" of transactions are hashed.  This requires a computer to do a calculation that costs resources such as a computer strong enough to do this quickly.  Since there are many people trying to do this because they get paid in new bitcoins to do so, it's really hard for a single person or group of persons to do all of the hashing themselves.

Not only are the new transactions hashed, but all of the old ones are too.  This turns into a very large transaction record constantly reverified and rehashed, called the blockchain.  Transactions are verified in batches called "blocks".

Where do bitcoins come from

Remember, they essentially come from the program, but new ones are rewarded to those verifying transactions as payment for doing a good job.  If someone tries to cheat, no one will give them new bitcoins.

New bitcoins are created according to the rules in the protocol.  And since the protocol says that everyone should award the first to verify transactions properly, users who use the right program do.

If a user uses the right program, this is all done more or less automatically, so a user can simply get coins from someone and send them to someone without having to worry about all of this complexity.

Good luck on your article and feel free to plagiarize this (but only you, okarin)!



If there's anything you still don't understand, send me a comment, and I'll try to help.

If you want the technical outline of what bitcoin is, you can read the original Satoshi Nakamoto paper.



Yes, I know there are a ton of ifs ands or buts, powerusers, but I was trying to outline the basics.  Feel free to edit this as necessary into layman's terms.