Bitcoin has a SHA-256 Hash to verify the coin is real, and Bitcoin mining tries to solve these SHA-256 hashes in transactions to run the transactions in a P2P network so there is no central bank that processes the transactions, the mining software does on each computer and then rewards the miner a fraction of a Bitcoin as a fee. Most people join Mining Pools and won’t get paid off until they earned 10 BTC or Bitcoins (BTC is the Bitcoin symbol).

The Federal government is basically treating it like a foreign currency.

With the ASIC Miners moving mining from thousands of cycles per second to millions of cycles per second the difficulty rating of earning Bitcoins has increased and people with GPU Miners won’t earn as much as they used to, so many switched to Litecoin which has a lower difficultry rating than Bitcoin because it does not use SHA-256 that the ASIC mining rigs are designed for, but uses a different one called Scrypt instead and ASIC mining rigs don’t work for Scrypt only CPUs and GPUs.