By Kevin Ebi.

While the experts continue to argue about whether the future of Bitcoin has any merit, businesses, cities and even some elected officials are hedging their bets and carefully embracing it.

Bitcoin’s latest boost came from the state of California, which now considers bitcoin – and other digital currencies – valid forms of payment. A bill easily passed the state Senate’s Banking and Financial Institutions Committee with only one dissenting vote and the governor  signed it into law.

The bill’s backers said it was simply time to get with the times. In a day and age where customers can pay for coffee in digital dollars using a barcode on their smartphone screens, it no longer made sense to require all the state’s business be done with the U.S. dollar. And that arcane requirement especially didn’t make sense in a state that’s home to about 40% of all Bitcoin professionals.

A tool to address poverty?

But Bryan Parker, an Oakland, Calif., mayoral candidate, sees Bitcoin actually proving useful to cities. He told the San Francisco Chronicle that he believes the high-tech nature of the currency could help fight poverty.

He says it takes a lot of discipline to track cash spending. It’s easy for the money to vanish with little to show for it. By tracking spending online, it’s easier to see where it’s wasted and take corrective action.

Parker also believes it could inspire people who for whatever reason won’t use a bank to start banking. For instance, people who are afraid to carry cash to deposit in a bank could easily save digital currency at home, he says.

Legal recognition growing

While California’s move is groundbreaking, there was already some momentum within the government to give legal status to Bitcoin. Earlier this year, the United States Internal Revenue Servicedeclared bitcoins and other digital currencies property – property that is subject to taxes. If a cash payment would have to be reported, the equivalent digital payment would have to be reported as well, the agency said.

Meantime, the Federal Elections Commission is now allowing political candidates to accept bitcoin donations. Within hours of the ruling, Colorado Congressman Jared Polis (D-Boulder) opened awebsite accepting bitcoins to help fund his re-election campaign.

Congress remains divided on Bitcoin, and Council Lead Partner MasterCard became the first company to lobby on behalf of digital currencies. Transaction costs are lower with Bitcoin, so it has the potential to revolutionize business. But parties in a digital transaction can be anonymous, which some worry could make everything from tax evasion to money laundering easy. MasterCard says it’s reviewing policy implications.

Wherever credit cards are accepted

Commercial support seems to grow by the day, with more businesses joining casinos and online retailers, such as Overstock.com and TigerDirect.com in accepting bitcoins directly.

MasterCard wants to take it one step further by making it easier for any business to accept payment in a wide variety of forms. It applied for a patent on a global payment Interchange.

In essence, if a digital currency or any other form of payment has an Application Programming Interface (API) that allows it to interact with other systems, MasterCard will be able to facilitate the transaction. It won’t matter to the seller how the buyer is paying; MasterCard’s Interchange would make the payment seamless.

Now with ATM convenience

In a few dozen cities around the world, it’s now easy to trade bitcoins for cash. Los Angeles recently received its first bitcoin ATMs. The first two machines are located in convenience stores and allow customers to buy and sell bitcoins and trade them for paper currency. The system has a number of security features. Customers have to verify their email address and have their palms scanned. Robocoin, which built the ATMs, says it has already heard from more than 100 other potential operators in the city.

Vancouver, Canada received the world’s first bitcoin ATM last fall. Paris, London, Madrid, Houston, andBoston, are among more than 40 other cities that have the machines.

Consumer support could grow

As it becomes easier for consumers to acquire and spend bitcoins, interest is expected to grow naturally, but two companies are teaming to try to drive even more interest this year.

Kryptoz and Bitpages.co are sponsoring a Bitcoin Car that will stop at major U.S. and Canadian citiesthis summer and fall. The car is on its way now from Alberta, Canada to Chicago for the North American Bitcoin Conference on July 19. Afterward, it will zig-zag across the countries until November, educating consumers about Bitcoin.

Conference organizers say the stakes now are high. The currency just turned five, and as interest builds, so do questions about its future. But they are working hard to keep the momentum on Bitcoin’s side.

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Originally posted at Smart Cities Council.