California Legalizes Bitcoin, But Critics Fear Security Issues For Silicon Valley

California lawmakers repealed a state a law last Monday that may have made bitcoin transactions illegal in the state, and the bill was signed into law on Saturday by Governor Jerry Brown, a Democrat.

But while advocates of bitcoin and other alternative currencies said the measure will help businesses keep up with the times, critics fear alternative currencies will come with a new set of security-related risks.

“While these innovations are taking us far in terms of technological advancement, they also expose individual customers and businesses to a wide array of risks, which largely stem from just how easy these innovations are to use,” Shellye Archambeau, CEO of MetricStream, a Palo alto software company, said in a statement.

“As these payment systems continue to converge and consolidate, and as we bring more functionalities onto our mobile devices, the higher the risk of our devices and data being compromised,” she said.

The law that Brown signed on Saturday repealed an “outdated” state law that prohibited the use of “anything but the lawful money of the United States," according to Reuters.

Assemblyman Roger Dickinson, (D-Sacramento), said the law was appropriate given the current technology landscape.

“In an era of evolving payment methods, from Amazon Coins to Starbucks Stars, it is impractical to ignore the growing use of cash alternatives,” he said in a statement.

The decision comes just days after Mt. Gox, one of the world’s largest bitcoin exchanges, was approved to begin bankruptcy proceedings after it lost 850,000 bitcoins to hackers earlier this year, worth roughly $500 million.

On Friday, U.S. authorities auctioned off 30,000 bitcoins they seized when they shut down Silk Road, an online black market for illegal services that primarily accepted bitcoin.