Microsoft Quashes Bitcoin Scare
Mar 14, 2016 3:28 PM PT
Micrososft on Monday withdrew a notice posted earlier in the day to its Windows website, which declared that bitcoin currency no longer would be accepted in its users' accounts.
"We continue to support Bitcoin for adding money to your Microsoft Account which can be used for purchasing content in the Windows and Xbox stores," the company said in a statement provided to the E-Commerce Times by spokesperson Carmen Vasilatos.
"We apologize for inaccurate information that was inadvertently posted to a Microsoft site, which is currently being corrected," it added.
Microsoft has removed the notice from the site but there's no mention of the error there.
Microsoft began allowing its customers to transfer bitcoins into their accounts in December 2014.
"The use of digital currencies such as bitcoin, while not yet mainstream, is growing beyond the early enthusiasts," Microsoft Corporate Vice President Eric Lockard said at the time of the announcement. "We expect this growth to continue and allowing people to use bitcoin to purchase our products and services now allows us to be at the front edge of that trend."
Although Microsoft is continuing to accept bitcoin, the currency itself is in the doldrums.
"Bitcoin has failed to gain momentum or awareness beyond its limited hold in the tech world," said Greg Sterling, vice president of strategy and insight for the Local Search Association.
"It has also been associated with criminal activity, which taints its brand," he told the E-Commerce Times.
Criminals who use ransomware to extort money from their victims typically ask for payment in bitcoin.
"Bitcoin has been accepted by the shadier parts of the market," noted Jim McGregor, principal analyst at Tirias Research.
While that kind of activity may deter consumers, it's unlikely to prompt businesses to shun the currency.
"That's like suggesting an organization not accept cash because cash is used in the drug trade," remarked Ben Knieff, a senior research analyst with the Aite Group.
Acceptance of bitcoin by large companies like Microsoft and Dell may give the currency some visibility, but it hasn't been enough to spur widespread acceptance.
"Right now, there's a market for this with niche applications and small businesses, and there may be a market for it with businesses like Airbnb," McGregor told the E-Commerce Times.
However, "a large percentage of the population doesn't accept it, and the financial community and governments don't accept it," he pointed out. "There's always been some government and significant financial backing behind currencies. Bitcoin doesn't have that."
While Microsoft's shunning of bitcoin was a false alarm, other companies have pulled away from the currency after trumpeting their support of it.
"It's a great marketing opportunity to say, 'We're on the leading edge, and we're supporting this new technology,' but once they find out it's not profitable or that it's too costly and time consuming, nobody likes to make a big deal about dropping support for it," the Aite's Group Knieff told the E-Commerce Times.
Cryptocurrencies like bitcoin and litecoin are gaining acceptance, although they remain niche products, Knieff noted.
"Your average consumer doesn't understand it very well." he said. "The ease of use will require more work to bring it mainstream."
Anonymity is one of the biggest barriers to adoption for currencies like bitcoin, maintained Danny Wettreich, CEO of bitcoin competitor GreenCoinX.
"Anonymity is a big issue for both government and users," he told the E-Commerce Times. "It has slowed down the adoption of cryptocurrency."
In contrast to other cryptocurrencies in the market, GreenCoinX has a "know your client," or KYC, standard, Wettreich said.
KYC is a process similar to opening a bank account.
"What that does is alleviate the concerns about governments and users that crooks and terrorists can use cryptocurrencies to hide their activities," Wettreich said. "That's what's been slowing down the adoption of bitcoin."