This April 3, 2013 file photo shows bitcoin tokens in Sandy, Utah.
(Photo: Rick Bowmer, AP)
An online travel agency in Los Angeles and a European private university have begun accepting payments in the popular virtual currency known as Bitcoin, a sign that businesses are moving into a new global economic era.
Cheapair.com, an online travel agency based in Los Angeles, began taking the virtual currency Thursday for the purchase of flights, and University of Nicosia in the capital of Cyprus began accepting tuition payments in Bitcoin.
"I'm excited about it," says Cheapair,com CEO Jeff Klee. "I'm anxious to see how popular it becomes as we get the word out. We expect people to come to us specially because they can use Bitcoin."
Bitcoin, launched in 2009, is decentralized digital currency that is traded from person-to-person, rather than through banks, and has no issuing or regulating country.
Bitcoin supporters recently appeared before Congress to explain the concept to lawmakers who asked whether it needed to be regulated after federal agents busted Silk Road, a website trafficking in illegal drugs that required customers to pay in Bitcoin.
Legitimate businesses have also adopted Bitcoin, including the dating site, OKCupid, the blogging site, WordPress, and a Subway sandwich shop in Allentown, Pa. A Bitcoin ATM began operating earlier this month in Vancouver.
University of Nicosia, in the Cypriot capital, said in addition to accepting Bitcoin for fees and tuition, it would offer a studies in digital currency in its spring semester.
Christos Vlachos, the university's chief financial officer, called digital currency "an inevitable technical development" that will lead to innovation in online commerce, international payments and global economic development.
Until a few months ago, Klee, a ground-breaking entrepreneur in on-line travel, knew little about Bitcoin. Then, a customer asked one of the site's travel advisers whether CheapAir.com would accept Bitcoin as payment.
"The travel adviser didn't know what it was," Klee said.
Klee researched what it would take for his company to accept Bitcoin. He said he liked the concept, but worried about Bitcoin's volatility.
Bitcoin's value is erratic. Bitcoin traded at $13 in January. In recent weeks, the value of one Bitcoin has surged as high as $900.
Klee found a vendor, Coinbase, that could administer the payment system and insulate him from the currency risk.
"We didn't want to get into a situation where we are taking a payment from a customer and then worrying about the value going down, not up," Klee said.
Klee sees benefits in Bitcoin's low processing fees and the elimination of credit card fraud, but he says he doesn't know if it will be widespread.
"It's a great concept, but it needs to get traction," Klee said. "You need to be able to buy a lot of things for it to be useful and valuable. If you have a lot of people accepting it, it because a useful and legitimate form of payment."