Bitcoin is now legal to use for making purchases in California after Gov. Jerry Brown signed a law that repeals the previous restriction on any currency that isn’t “the lawful money of the United States.” It’s certainly fitting that California, home of Silicon Valley and the seat of the U.S. technology industry, is the first state to recognize digital currencies as legal tender.

Bitcoins

Bitcoin not the only alternative currency recognized

Fox Business reports that bill AB 129 covers not only bitcoin but also currencies that are specific to communities and also points for customer reward systems. Lawmakers in California not only named bitcoins, but also Starbucks Corporation (NASDAQ:SBUX)’s Stars and Amazon.com, Inc. (NASDAQ:AMZN)’s Coins as being currencies. Amazon Coins can be spent on apps for the Kindle Fire, and Starbucks Stars can be used to buy food and drinks.

California lawmakers said it’s “impractical to ignore the growing use of cash alternatives.” Assemblyman Roger Dickinson wrote the bill and said it is intended “to fine-tune current law to address Californians’ payment habits in the mobile and digital fields.

Bitcoin’s popularity increases

Last week’s new law is interesting because it comes about a year after California threatened to fine the Bitcoin Foundation if it continued to trade there. Over the last couple of years, lawmakers in multiple countries have seen the need to address the issue of bitcoin and other digital currencies. The FBI and the U.S. Marshals recently auctioned off the bitcoins they seized from illicit marketplace Silk Road. They auctioned the coins off as property, which is interesting because it treats them differently than how the state of California is treating them now.

Even PayPal may one day embrace bitcoin. The eBay Inc (NASDAQ:EBAY) subsidiary’s CEO said he thinks that they will at some point, although he did not specify when. Some have suggested that bitcoin could become a competing payment system. Some emphasize the technology behind bitcoins, while others, like the state of California, see them as a currency, and still others see them as property or even something else. It’s anyone’s guess which view of bitcoin will become the generally accepted view.