it still works like real money one person pays another person for properties and services. However once money is exchanged the record of the transaction is publicly recorded on to a ledger known as a block chain. Other bit coin users known as miners verify the transactions in the block chain.
After a certain amount of transactions have been verified by a minor. That minor will receive newly minted bit coins for their work. And new bit coins will be added into circulation. Well there are currently more than 12 million Bit coins in circulation.
The total amount Bit coins back and ever be created is topped over $21 million the creation rate is automatically halved every few years as more bit coins are added into circulation. This system Created after gold-mining makes finding new bit coins rarer as the number of available Bit Coins breaches the 21 million cap.
So should you really need to convert all your money to Bit Coins. Not essentially while a few web sites such as read it word press and overstock have begun accepting Bit coins and Microsoft announced that they will use bit coin Payment system on their Products . But most major retailers have yet to take the dive.