Screenshot by Nick Statt/CNET

Vicco, Ky., is about as small town as it gets, with a population that hovers around 330 people. That does not appear to have kept its residents, namely Police Chief Tony Vaughn, in the dark when it comes to Internet trends and emerging crypto-currencies.

The city commission on Monday approved a measure that would allow Vaughn to receive his salary entirely in Bitcoin, an alleged first in the US and yet another story bolstering the reputation of the unregulated virtual currency as a payment method that will one day, supporters hope, stabilize and become commonplace.

Vaughn's pay, still set in US dollars, will receive standard federal and state deductions, the Hazard Herald reports, before being converted into Bitcoin based on current trading values at the time of pay and deposited into an account held by Vicco. The Bitcoins will then be transferred to Vaughn's personal account. The city expects to be able to pay Vaughn this way as early as this month.

Trading values for Bitcoin began plummeting last spring and seemingly stabilized at $200 in early November. But the currency has inflated tremendously in the last four weeks, far surpassing everyone's expectations by rocketing past $1,000 thanks in part to burgeoning demand in Asian markets like China. The value of one Bitcoin currently sits at $1,181 on the popular Mt. Gox exchange.

There's also no shortage of Bitcoin news these days. China's largest exchange, BTC China, is aggressively lobbying regulators in an effort to seek recognition of Bitcoin as an available currency, and is trying to negotiate with the country's top-tier banks to further facilitate the process. Just today, police in Germany and China cracked down on two unrelated Bitcoin scams in which hackers used botnets to take over unsuspecting people's computers and use the power to mine for coins, an alleged offense that video game company E-Sports Entertainment was fined $1 million for just last month.

As for Vicco, the decision to pay a city salary in Bitcoin is less a testament to the currency as it is an experiment in untested waters. "I'm excited about it; it's a first for Vicco again," Vaughn told the Herald. The police chief is referring to the tiny town's tendency to make big headlines.

In January, it became the smallest city in the US to ban discrimination based on gender identity or sexual orientation. Its openly gay mayor, Johnny Cummings, was featured on "The Colbert Report" in August for that triumph and the unorthodox progressiveness of his city in the heart of the Bible Belt, in a satirical segment titled "People Destroying America."

Thanks to that publicity, the town has received a number of donations. Opening its arms to Bitcoin, Cummings told the Herald, will make that process even easier. The city will now be taking Bitcoin donations to help better city infrastructure down the line.

Update at 2:37 p.m. PT: Adds clarification on Vicco's payment method and flow of funds from USD to Bitcoin.