A bill has come into force in the state of California which specifies that bitcoin is not under any ban of issuance or circulation and, therefore, is legal for payments and transactions. The comments section of the bill clarifies what bitcoin is and how it operates.

The bill AB129 was passed earlier last year by the governor Jerry Brown and has now come into force. It replaces the law previously in effect, Corporations Code Section 107, which prohibited the issue or circulation of any money but “lawful money of the United States”. That law dates back to the middle of the 19th century, when there were concerns over the ability of new states to create their own currencies, as the new bill explains.

Bitcoin is now legally recognised to be a currency along with other existing digital currencies. The bill ensures that alternative currencies such as bitcoin along with other digital currencies, point systems, and coupons, are not seen as illegal and introduces the unifying concept of “alternative currencies”. It does not, however, establish an obligation to accept bitcoin as legal tender.

This makes California one of the most profitable states for bitcoin businesses, which seems to be one of the top priorities for the legislators: “Bitcoin, a digital currency … , has gained massive media attention recently as the number of businesses has expanded to accept Bitcoins for payment.”

A helpful summary of essential information about bitcoin is offered in the bill, which will likely raise awareness of cryptocurrencies and the general principles underlying them. The bill calls bitcoin “pseudonymous” and claims that a user’s identity can be revealed through the block chain, citing research which found that 40% of Bitcoin users are vulnerable to disclosure.