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Ohio last week became the first state where businesses can pay their taxes in bitcoin.
Seminole County, Fla., began accepting bitcoin for some payments this summer.
Bitcoin is the most well-known of cryptocurrencies, which allow users to record data and transactions instantaneously in a way that is mostly unhackable.

Over the last four months, two governments in the United States have started accepting certain types of payments in cryptocurrency, marking a growing trend that some hope will catch on.

Last week, Ohio became the first state where businesses can pay their taxes in bitcoin. The move follows Seminole County, Fla., which began accepting payments in bitcoin for things like license fees and taxes in late August.

The government adoption is the latest signal that cryptocurrencies are gaining legitimacy after initially being associated mainly with drug and weapons dealers on the dark web. "The negative stigma is really starting to go away," says Sean Rolland, director of product for BitPay, which has partnered with both governments. "These are not money launderers but real people using this on a regular basis."

For both Ohio and Seminole County, accepting bitcoin has two major perks. First, BitPay -- much like currency exchange desks -- locks in an exchange rate and converts the currency to U.S. dollars. That makes the transaction less risky for governments. After all, it's been a topsy turvy year so far for bitcoin. The cryptocurrency's value plummeted 73 percent this year. This week, the currency saw a quick drop, falling more than 6 percent to $3,886 per coin on Monday.

"Whether bitcoin is worth $1,000 or $10,000 dollars is not relevant to us because it works like an exchange rate," says Joel Greenberg, Seminole County's tax collector.

Second, bitcoin offers taxpayers an option with a lower fee -- 1 percent -- than those associated with credit cards, where there's usually a 2 or 3 percent surcharge for payments to the government. As part of their partnership with BitPay, Ohio and Seminole County lets the company keep the fee as compensation.

Bitcoin is the most well-known of cryptocurrencies, which all use distributed ledger technology. Distributed ledger technology -- such as blockchain -- allows users to record data and transactions instantaneously in a way that is mostly unhackable.

Given those features, Ohio Treasurer Josh Mandel hopes accepting bitcoin for 23 business taxes will be particularly appealing to tech startups and international businesses. He eventually wants to expand payments to individual taxes and other types of cryptocurrencies.

"We want to project to the rest of America that Ohio is loud and proud about embracing blockchain technology," he says, noting that the launch of ohiocrypto.com coincides with a major blockchain conference in Cleveland. "We're trying to plant the flag and send the message to entrepreneurs and software developers across America that Ohio is open for business."

Still, Mandel acknowledges that such a change in business climate won't happen overnight. The take-up rate in Ohio is likely to be slow, as it as been so far in Seminole County. But that's understandable given both the newness of the program and bitcoin's volatility.

For now, it'll likely remain something of a novelty. To that end, Greenberg points out that his office installed a bitcoin ATM in the lobby where taxpayers can buy the currency and speculate. "If they want to sit on it for a week before they come back to make their payment, they can," he says. "If it goes up, they net the difference."

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Liz Farmer | lfarmer@governing.com | @LizFarmerTweets | Google+