In 2013, a survey of Bitcoin luminaries led to a single consensus about 2014: this would be the year of merchant adoption. Not only has 2014 lived up to this prediction, it has exceeded it in surprising ways with Overstock.com, TigerDirect, Dell, and others joining the increasing body of large businesses accepting bitcoin. It’s almost the end of the year and Microsoft just came in under the wire by joining BitPay to implement bitcoin payments for apps and games for Windows Phone, Xbox and Windows.

By staking a claim with Bitcoin, Microsoft is adding tremendous credibility to the cryptocurrency’s legitimacy as a payment system. Microsoft made $86.8 billion in 2014 revenue, compared to Dell, the latest big company to sign on with Bitcoin, who made $56.9 billion in 2013.

By offering bitcoin as a possible payment solution on Xbox LIVE, Microsoft is opening up a huge audience to the phenomena of Bitcoin. Xbox One was released on November 22, 2013 and has already sold 3 million units; the Xbox 360 sold 83.7 million worldwide (as of March 31, 2014.) Xbox Live itself is listed to have approximately 48 million active subscribers (source: Microsoft). By the time the official announcement came from Microsoft, the option had already appeared on consoles.

Microsoft’s cultural impressions of bitcoin is promising

Executives from Microsoft have glowing things to say about Bitcoin and the phenomenon of digital currencies giving a sneak peek into why the software giant has chosen now to climb onto the bandwagon.

“The use of digital currencies such as bitcoin, while not yet mainstream, is growing beyond the early enthusiasts,” Eric Lockard, corporate vice president of Universal Store at Microsoft said in a statement to Forbes. “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.”

BitPay’s cofounder and executive chairman Tony Gallippi is also quoted as saying that Microsoft’s CEO, Satya Nadella, is “a Bitcoin fan.”

Digital currency for digital goods

Bitcoin seems like it fits nicely into a space where it can be used to buy digital goods, such as apps in Microsoft’s marketplace, because Bitcoin is itself a digital currency. Bitcoins are stored in wallets accessible with computers or mobile devices and can be transferred using a smartphone.

According to Neilsen’s Digital Consumer Report, two-thirds of US consumers own smartphones and given the 48 million users of Xbox LIVE that’s a significant number of people who have an Xbox and a smartphone. With a large number of fairly easy-to-use Bitcoin wallet apps making their way onto phones–such as Circle, Coinbase, Xapo, and others—the increase in audience cannot be dismissed.

Already, the effects are being seen on Reddit where Xbox One enthusiasts from /r/XboxOne are asking questions of the /r/Bitcoin community.

With the option suddenly appearing for Xbox LIVE users, Windows Phone users, and others, it will produce a lot of curiosity for the Bitcoin community to field. Since its introduction in 2009, Bitcoin has been somewhat niche, but during 2014 many consumer-facing services have begun to take root in the form of wallets and education that greatly improve user experience.

Microsoft’s app marketplace bitcoin integration still not perfect

One of the fundamental killer apps of bitcoin is it’s near infinite divisibility and potential usefulness for providing extremely small transactions with little overhead. In fact, it’s constantly argued about how a $2 app with even just a 1% fee is still a smaller hit than using a credit card, which come with exorbitant fees for consumers and businesses.

On Xbox LIVE’s games marketplace, however, Microsoft does not have consumer purchasing games directly. Instead bitcoins would be used to fill their Microsoft wallet with increments of dollars starting at $10.

Comments from Microsoft do, however, make it sound like the option to buy directly may be a future development.

Image credit: /u/cryptograffiti on Reddit, http://www.reddit.com/r/Bitcoin/comments/2ozkqk/christmas_came_early/