This technical explaination
is also very helpful to understanding how Bitcoin actually works.
"Pretty much untraceable", as Stross describes it, is unaccurate. Bitcoin transactions are 100% traceable, but they map to an address, not directly to an identity. Mapping that address to a person (when, say, Bitcoins are turned into real money) is only about as hard as mapping a bank account to a person - and easier in some regard, since Bitcoin transactions are by definition preserved forever. It's a myth that Bitcoin is untraceable; otherwise, his essay is pretty spot-on.