Given its monolithic size, Microsoft's approval is arguably one of the most significant things to happen to Bitcoin since the first transaction in the currency in 2009. However, does the decision confer any benefits on Bill Gates' company or is it just a PR move designed to ingratiate Microsoft with the currency's many advocates?
It's worth noting here that Microsoft simultaneously does and doesn't accept Satoshi Nakamoto's cryptocurrency. Nobody at the company's Redmond HQ handles any Bitcoin. It's not invested, carried, or owned by any staff in a professional capacity. Microsoft's support of Bitcoin comes entirely from working with BitPay.
BitPay, a payment processing service, functions as an intermediary between customers and Microsoft, meaning that whenever somebody pays for goods with Bitcoin, the sum is converted to dollars before it arrives in Washington. It's a bit like saying a British company accepts Chinese yuan because PayPal will handle the conversion to pounds sterling.
So, with that in mind, Microsoft isn't a supporter of Bitcoin in the truest sense. The company's decision to accept the currency is arguably more to do with customer service and gaining customers in emerging markets.
Here's why:
Blockchain
Companies operating in the iGaming sector, which is made of online and mobile casinos, realised a long time ago that accepting Bitcoin could make them more appealing to gamers.
For example, a brand like VegasCasino.io is able to offer immediate, irreversible and private deposits owing to the fact that it doesn't accept any other currency in its bitcoin casino. It's a bold decision but VegasCasino.io removed some the obstacles associated with using and acquiring Bitcoin by linking to currency exchanges on their homepage.
The advantages of using Bitcoin can be attributed to the landmark technology behind it - blockchain, a record-keeping system that is almost immune to fraud and counterfeiting. As it's also unregulated, Bitcoin allows its users to avoid things like interest rates, credit card fees, cross-border payments, and a host of other levies added by financial institutions.
The above benefit is particularly important in the developing world, where credit card APR in some countries is comparable to that of payday loans in the UK (cards in Brazil, for example, average 414.3% APR). If you consider that digital distribution platform Steam now allows Bitcoin payments as a solution to the above, Microsoft's reasons for supporting the currency start to become a little clearer.
Shoppers don't buy from companies if their bank is going to punish them for doing so. Bitcoin is a way around that problem.
Internet Access
So, to answer the question in the title - accepting Bitcoin does give Microsoft an advantage over its rivals. However, it may be insignificant. Reaching an untapped market is a definite incentive to adopt a new currency but developing countries often have terrible internet coverage, meaning that Bitcoin is unlikely to have much of a following outside the Western world.
To demonstrate, here are a few numbers: India is the 8th fastest growing economy by GDP but only 26% of its population has internet access according to the World Bank. It's the same in Côte d'Ivoire (4th fastest but with just 21% coverage) and China (14th fastest with 50% coverage). Brazil's GDP is actually falling but it has the highest proportion of people with internet access so far, at 59%.
As a final point, it's probably best to view Microsoft's decision to accept Bitcoin as an investment in future shoppers. Bitcoin has long been considered an alternative to punitive bank fees, even for major US investors, so it's perhaps only a matter of time before the cryptocurrency gains an audience in other parts of the world.
