The official national currency in Laos is the Lao kip (K). Although only kip is legally negotiable in everyday transactions, in reality three currencies are used for commerce: kip, Thai baht (B) and US dollars (US$).
Laos relies heavily on the Thai baht and the US dollar for the domestic cash economy. An estimated one-third of all cash circulating in Vientiane, in fact, bears the portrait of the Thai king, while another third celebrates US presidents. Kip is usually preferred for small purchases, while more expensive items and services may be quoted in kip, baht or dollars. Anything costing the equivalent of US$100 or more is likely to be quoted in US dollars.
However, the majority of transactions will be carried out in kip, so it's always worth having a wad in your pocket. Notes come in denominations of 500, 1000, 2000, 5000, 10,000, 20,000, 50,000 and 100,000 kip. Small vendors, especially in rural areas, will struggle to change 100,000K notes. For larger transactions the dollar and the baht are favoured.
Tipping is not customary in Laos except in tourist-oriented restaurants, where 10% of the bill is appreciated, but only if a service charge hasn't already been added.