Update: Additional comments from Microsoft and BitPay have been added to the end of this article.

In a surprise move, Microsoft quietly started taking Bitcoin today, allowing the funding of Microsoft accounts with the digital currency. They are using Bitpay as their payment processor.

Purchases cannot be made directly with Bitcoin. Instead it can be used to fund accounts in $10, 15, 20, 50, 75 or 100 options. A redditor apparently was the first to come across the option. The news comes as such a shock that the initial reaction among many was that it was a "photoshop" job. It isn't a hoax, however, as the payment option does in fact show up, at least for US residents. It is not known at this time if the option is available for international customers, but there were some redditors complaining that they could not find the option.

We were able to independently confirm that it does work, by simply trying it out for ourselves.

As alluded to above, Microsoft is allowing people to fund their Microsoft accounts with bitcoin, not to make direct purchases. Microsoft account holders simply go to account.live.com, click “Payments & Billing,” “Payment options,” and then select “Microsoft Account” from the lefthand column.

The funds in Microsoft accounts can be used to purchase digital goods for Windows 8, Xbox 360, Xbox One and Windows Phone. It is not possible to use money on a Microsoft account to purchase physical items like tablets or laptops. Customers can only “purchase digital goods at select Microsoft online stores.” This means Windows games, Xbox games, music, movies and other digital media—not an insignificant list.

The closest thing to an official announcement by way of Microsoft so far has been a help page they quietly put up. No announcement has been made on their official blog or social media channels at press time.

Despite the unanswered questions as this time, the important news is this: Microsoft joins Overstock.com, TigerDirect, Newegg and Paypal on the Bitcoin bandwagon. It is gathering steam.

We have reached out to both Bitpay and Microsoft for comment and will update this space accordingly. Microsoft has posted a lengthy blog post on the news. Bitpay has also posted its own, shorter blog post and took additional time to give us a few details about the deal. In the blog post published by Microsoft, Eric Lockard, the "corporate vice-president of Universal Store at Microsoft," was quoted as saying the following:

The use of digital currencies such as bitcoin, while not yet mainstream, is growing beyond the early enthusiasts. 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.

Interesting enough, Microsoft is capping the total amount that can be funded to a Microsoft account at US $1,000 per day, per account, and a total of US $5,000 per day for users with multiple accounts.

In its own blog post, Bitpay welcomed Microsoft to the Bitcoin fold:

We have enjoyed building our relationship with Microsoft and look forward to continuing our work together on innovative Bitcoin projects and business models. Please join us in welcoming Microsoft as the newest member of the Bitcoin economy.

Speaking with Cointelegraph, Bitpay's VP of Marketing, Stephanie Wargo did reveal to us that the partnership started three months ago when Microsoft "chose" Bitpay to process its payments. Since then it has been three months of preparation with Microsoft's "tech teams, legal teams, and business teams" getting the system ready.

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