Bitcoin is a digital currency created in 2009 by Satoshi Nakamoto. It is also the name of the open source software designed in order to use this currency.
Bitcoin is one of the first implementations of a concept called cryptocurrency, which was first described in 1998 by Wei Dai on the cypherpunks mailing list. Building upon the notion that money is any object, or any sort of record, accepted as payment for goods and services and repayment of debts in a given country or socio-economic context, Bitcoin is designed around the idea of using digital files as money, independent of any central issuing authority.
Wikipedia on Bitcoin.