Would you invest in a Bitcoin Fund?

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Bitcoin has been promoted as an alternative crypto-currency that exists outside the realms of governments and central banks. Now Cameron and Tyler Winklevoss, the twins best known for their part in the history of Facebook, filed a proposal with securities regulators that would allow any investor to trade bitcoins, just as if they were stocks.

Questions:
1. What is a bitcoin?
2. How would the fund work?
3. What are some of the risk factors associated with bitcoins and the potential for this fund?

Source:
Popper, N. and P. Lattman. (2013). Winklevoss Twins Plan First Fund for Bitcoins. The New York Times, July 1 (Retrievable online at http://dealbook.nytimes.com/2013/07/01/first-name-in-the-first-fund-for-bitcoins-winklevoss/?WT.mc_id=DB-D-I-NYT-MOD-MOD-M312B-ROS-0713-HDR&WT.mc_ev=click&WT.mc_c=219740)

Tyler, left, and Cameron Winklevoss in April, when they said they had $10 million in bitcoins.