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.