12 June 2014
Last updated at 11:40
The rise of Bitcoin has been hampered by security concerns
One of the world’s largest online travel agencies, Expedia, has become the latest company to accept Bitcoin transactions as a form of payment.
The firm will initially accept the virtual currency for hotel bookings only, and is currently restricting the trial to its US site.
But one Bitcoin watcher told the BBC this was “a big move” for the currency.
Expedia’s announcement comes after a turbulent few months for Bitcoin, which has been plagued by security concerns.
Continue reading the main story
How Bitcoin works
Bitcoin is often referred to as a new kind of currency.
But it may be best to think of its units being virtual tokens rather than physical coins or notes.
However, like all currencies its value is determined by how much people are willing to exchange it for.
To process Bitcoin transactions, a procedure called “mining” must take place, which involves a computer solving a difficult mathematical problem with a 64-digit solution.
For each problem solved, one block of bitcoins is processed. In addition the miner is rewarded with new bitcoins. This provides an incentive for people to provide computer processing power to solve the problems.
To compensate for the growing power of computer chips, the difficulty of the puzzles is adjusted to ensure a steady stream of about 3,600 new bitcoins a day.
There are currently about 11 million bitcoins in existence.
To receive a bitcoin a user must have a Bitcoin address – a string of 27-34 letters and numbers – which acts as a kind of virtual post-box to and from which the bitcoins are sent.
Since there is no registry of these addresses, people can use them to protect their anonymity when making a transaction.
These addresses are in turn stored in Bitcoin wallets which are used to manage savings.
They operate like privately run bank accounts – with the proviso that if the data is lost, so are the bitcoins owned.
A number of smaller online travel sites already accept virtual currencies, including Travel Keys and CheapAir, but Expedia is the first company of its size to adopt Bitcoin.
Emily Spaven, managing editor of Bitcoin news site CoinDesk, told the BBC the move was “brilliant news” and it “brings digital currency further into the consciousness of the mainstream”.
In a statement, Expedia’s global vice-president, Michael Gulmann, said the company was “in a unique position” to “solve travel planning and booking for our customers and partners alike by adopting the latest payment technologies”.
Expedia will use Bitcoin exchange Coinbase for processing transactions, but Mr Gulmann told the Wall Street Journal that the firm would not hold the currency, but would convert its Bitcoin deposits back into US dollars every 24 hours.
However, as Ms Spaven points out, “that’s what most of the big companies are doing, because [the price of] Bitcoin is still massively volatile”.
Bitcoin, which is the world’s most prominent crypto-currency, has been the subject of much controversy in recent months.
The collapse of Japanese Bitcoin exchange MtGox, following a number of security breaches, harmed the currency’s reputation, and there have been several controversies surrounding taxation of transactions made with Bitcoin.
Customers on Expedia’s US site have the option of paying with Bitcoin at checkout
But, the digital currency took another step closer to the mainstream this week, with both Google and Yahoo adding its conversion price to its financial tools.
More than 60,000 online retailers now accept bitcoins worldwide.