Microsoft Move is Win for Bitcoin

By Michael J. Casey 

        Technology firm Microsoft Corp. took a small step Thursday that could give a big boost to the fledgling virtual currency bitcoin.
        The Redmond, Wash., software company announced that it has teamed up with Atlanta-based digital-currency payment processor BitPay to allow customers to use bitcoin when using their online Microsoft accounts for certain products.
        "This is about providing choice to all of our customers as to which method they want to use in purchasing things from us," Eric Lockard, corporate vice president of Microsoft's Universal Store, said in an interview.
        While he cautioned against "reading too much" into a move that another Microsoft spokesman described as "dipping our toe in the water," Mr. Lockard said the firm expects to see continued growth in bitcoin-based purchases.
        "While not yet mainstream," the use of digital currencies is "growing beyond the early enthusiasts," he said.
        The software firm won't be accepting bitcoin itself. It is making use of a BitPay service by which the bitcoin processor accepts the digital currency and converts it into dollars that are then transferred to Microsoft at the value cited for the original transaction.
        For now, the bitcoin option is limited to purchases of "content in the Windows Store, or in stores that house Xbox Games, Xbox Music or Xbox Video," the company said in a blog post, which means many other Microsoft products aren't available to bitcoin users.
        Whereas users can buy digital content such as music, videos and apps with bitcoin, it can't be used to buy software products such as Windows operating systems or Microsoft Office products, or hardware such as Xbox consoles
        Microsoft spokesman Ryan Day said, "we are not going guns blazing on this yet." Mr. Day declined to comment on whether other parts of Microsoft will start accepting bitcoin.
        Launched in 2009, bitcoin is an electronic currency that is created on computers and traded among people who store it in digital wallets.
        Despite volatility in the price of bitcoin over the past year, a growing number of mainstream businesses accept bitcoin as payment for goods and services, often hedging the risk of holding the digital currency by quickly converting it into dollars.
        Among the companies that have recently started accepting bitcoin: computer maker Dell Inc. and travel-booking company Expedia Inc. In September, charity organization United Way said it would take bitcoin for SHYdonations.
        In a telephone interview, BitPay Chief Executive Tony Gallippi called the Microsoft decision "the best endorsement for bitcoin to date....The only company bigger than Microsoft is Apple, and Apple tends to move slowly."
        Apple Inc. spokesman Tom Neumayr declined to comment.
        Whereas Apple, a big Microsoft competitor, is heavily promoting its propriety Apple Pay payment system for mobile devices, Microsoft has taken a broader approach to payments.
        The development team at Microsoft has in the past taken an interest in bitcoin's core SHYtechnology.
        In 2012, a team of four Microsoft researchers examined bitcoin's system for decentralized payments and published a paper that offered some enhancements to its underlying software algorithm.
        Microsoft's bitcoin move was partly focused on the gaming community that exists around its Xbox consoles, Mr. Lockard said. "The demographic of people that are using bitcoin today overlaps to a certain extent with folks who are purchasing games and other digital content from our marketplace," he added.
        The bitcoin initiative grew out the development of Microsoft's prepaid stored-value cards, which began as gift cards sold at retail outlets but were later extended to the online virtual-card format that has now been adapted to allow bitcoin SHYpayments.
        Robin Sidel contributed to this article.
        (END) Dow Jones Newswires

        December 11, 2014 20:38 ET (01:38 GMT)
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