Bitcoin - Imaginary, Virtual, or The New Dollar?

I barely comprehend the nature of currency and money, but Bitcoin is a Thing, a new way to pay merchants and to garner investments. And now I'm attempting to learn about "cryptocurrency".

The Senate is trying to puzzle it out, and already the Federal Election Commission says Bitcoin is legal for political donations.

Bitcoin transactions are also being used by a proposed "assassination" agency.

As is so often the case, I have no understanding of what is happening except to observe that something is happening.