Bitcoin, the virtual currency that so far has attracted more hype than actual usage, took another step into the mainstream on Thursday as the Sacramento Kings basketball team said it would start accepting it for purchases.
The King’s new lead owner, Vivek Ranadivé, who made a fortune in the tech industry as founder and CEO of software firm TIBCO (TIBX), is working to revive interest in one of the NBA’s historically less popular franchises. The NBA last year denied a bid to move the team to Seattle.
Once relegated to the world of hackers and online activists, bitcoin is increasingly entering the mainstream economy. Online retailer Overstock.com said last week it made $126,000 of sales in bitcoins the first day it offered to deal in the currency. A number of other recognizable websites, such as WordPress, Reddit and OkCupid, have begun accepting bitcoins. And last month, a California car dealer sold a Tesla electric car for bitcoins.
The price of bitcoins, snippets of digital code that can be used as money, has fluctuated wildly since the currency started trading in 2009. The price has swung from more $1,200 to less than $600, then back to around $800 in just the past two months. The most recent plunge followed news that Chinese regulators had decided to prohibit the country’s banks from dealing in bitcoin. But the Kings and other merchants that transact in bitcoins use intermediaries to rapidly convert the currency back into dollars and avoid risks from the price swings.
The Kings said they would rely on BitPay, an intermediary firm that specializes in processing bitcoin transactions. Tickets to upcoming Kings games range from about $30 with tax for nose bleed seats near the top of the arena to almost $1,000 -- or just more than one bitcoin -- for a courtside view.
"We are maniacally focused on creating the most seamless experience for our fans in all facets,” Ranadivé said in a statement. “With BitPay, we are able to implement a technology that allows our fans to make Kings-related purchases without physically reaching into their wallets."
The Kings said they are already accepting bitcoin for payment in their team store. Ticket sales via bitcoin will start March 1. Initial interest may be light as the team has struggled this season, winning only 14 games and losing 23. The Kings rank 21st out of 30 NBA teams in average home attendance.
Bitcoin users can transact online quickly and nearly anonymously while avoiding credit card fees.
An unknown hacker or group of hackers created the currency as an autonomous system with no central monetary authority. The system has generated about 12 million bitcoins so far, valuing the total bitcoin economy at more than $10 billion.
Concerns about criminal activity have somewhat hampered efforts to create legitimate services for the cryptocurrency. Last October, federal authorities shut down a web site known as the Silk Road that allowed customers to buy drugs and other illegal items with bitcoins. And in August New York regulators subpoenaed 22 companies active in the bitcoin economy, including well-known venture-capital firms including Google Ventures and Andreessen Horowitz, seeking to uncover possible illegality.