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I keep hearing about this but don't know what it is.

Can anyone explain it to me? Is it some sort of virtual currency or something? Do you trade it like forex or stocks or what?

Second time I've come across this phrase - I've no idea either as of yet.

I havent really researched it fully but it seems its just a new type of general online currency thats value rapidly increased when it was released, sparking frenzied purchasing of it. Then, its value seemingly plummetted, losing people heaps of cash!

It is quite simple. You "mine" bitcoins by running server/gpu rigs. It is kind of like the lottery. The more times you solve a changing alogorithm the more enteries you have into the lottery. Only a specific number of bitcoins are released over time.
More people mining the less likely it is to "win" one.

Bitcoins are then either used for goods/services or sold on an exchange like forex or the stock market.

To me it seems like an ideal money laundering scheme. Say i have a million dollars which i need to "clean". I have no server farm or rig. But low and behold i generate money out of nowhere for paying a little more than it is worth, but in turn can sell them for slightly less than what I paid. FBI have been trying to prove it for ages.

Kinda makes sense that it has to be related to money laundering, otherwise the bitcoin wouldn't have a value as such as the processing power isn't used for anything productive. Also would explain the meteoric rise in value.

I beleive the temporary price crash was due to mal-bot which stole 25,000 coins from a trader. Worth an estimated $500,000.

LOL
I'm still a bit confused!

So you can "mine" these bitcoins and earn virtual cash that u can use to pay for real physical items?
And you don't need to invest any cash to "mine", just use ur PC like SETI?

Might start using it so. Though I'd imagine the rewards are pretty low, even if it is a lottery!

Good luck. With a 'normal' pc you would be lucky to get a single bit coin a month, which has a current value of around $17. That would hardly pay the the power.

To make it economical you must use GPU's rather that CPU's as they are more suited to solving the alogorithm. Youtube "mining bitcoin" and you will see what i mean.

Ah ye i get ya now. So I need to go out and spend a cupla hundred on a good gfx card, then I can use it to harvest 30c or something!! :p