Buyers, however, do need to have confidence in merchants that they won't be ripped off, since the transactions are one-way and not reversible. But they also benefit from strong anonymity, since BitCoins are exchanged via a 34-character alphanumeric "address" that a user holds and no other identifying information.
Gallippi said BitPay had been steadily growing its transaction volumes for its merchants, even hitting $250,000 in a single day earlier this year. Most purchases through its merchants are for around $25 dollars, he said. In August, BitPay transacted a total of about $500,000. For domestic U.S. transactions, the company charges a 2.69 percent transaction fee.
BitPay's 1000th merchant is BitCoin Store, an electronics dealer based in San Jose, California, that will soon open its website for business and only accept BitCoins, Gallippi said. BitPay is also in early discussions with three of the top 25 websites ranked by Alexa, which are testing BitPay's systems, he said.
Other merchants signed up with BitPay include Butterfly Labs, a company that makes high-end processing equipment for "mining" BitCoins, a process by which computing power is dedicated to solving a mathematical problem in order to generate BitCoins. There's also Vegemesta, a vegetarian restaurant in Finland. BitPay also has in-person BitCoin payment products, including applications for the iPhone and Android.
Still, there are a lot of questions around the future of BitCoin, and its exchange rate has seen wild fluctuations from a high of around $30 to as low as $2. Gallippi admits the situation "is like the wild west right now," and it remains to be seen how governments will craft policy around BitCoin or how financial institutions will deal with a rising competitor.
"It's going to be an interesting dynamic," Gallippi said. "You look at what e-mail did to the post office, and they're not too happy right now."
Sign up for CIO Asia eNewsletters.