The currency in Bulgaria is Bulgrian lev (BGN). All payments within the country are made in levs.
Other currencies would not be accepted in the shops, restaurants, bars, hotels, etc. They might be accepted unofficially in some places but with very low exchange rate.
More and more dealers in Sofia and throughout the country accept major credit and debit cards. Look for respective stickers on the front doors and cash machines. Also cash dispensers (BANKOMATs) are available in many places.
The exchange rate of the Bulgarian lev is fixed to the euro by the Bulgarian National Bank (BNB):
1 EUR = 1.95583 BGN.
Exchange rates of other currencies are calculated according to European Central Bank rates to EUR. They can be found here (the full list is here) or with currency calculator here.
Exchange of banknotes can be done in bank offices or exchange desks.
Do not change on the street whatever rate they offer to you. It is 100% sure you will be fooled out of your money!
There are numerous exchange desks around. They are labelled with sign CHANGE and a board where they are obliged to display their WE BUY and WE SELL rates. Normally they do not ask for commission (sign NO COMMISSION must be present). The difference between the BUY and SELL rates is normally within ±2% of the BNB rate (BUY is less within 2%, SELL is more within 2%). If you see much larger differences, or some of the signs and/or board with rates are suspicious, better refrain from exchange there.
At the airport and in the hotels you will get the least favourable BUY rate, of course.
