Microsoft's Crypto Investment: Which Coins Are They Betting On?

Microsoft has been investing in the crypto space for several years now. In 2018, Microsoft added Bitcoin to its list of payment partners, allowing users to purchase content in the Windows and Xbox stores using the cryptocurrency. In 2021, the tech giant led a $27 million funding round for crypto startup Palm NFT Studio, which offers services for artists to establish NFT marketplaces. More recently, Microsoft participated in a $450 million funding round for blockchain startup ConsenSys, headed by Ethereum co-founder Joseph Lubin. These investments indicate that Microsoft is racing against other tech giants like Meta, Google, and Twitter to get a foothold in the world of blockchain and web3.

Microsoft's $27 million investment in crypto startup Palm NFT Studio

Microsoft has led a $27 million investment in crypto startup Palm NFT Studio, with its venture fund M12. The funding round also saw participation from venture firm Griffin Gaming Partners, and investment firms RRE, Third Kind Venture Capital, NFT investor Sfermion, and The LAO.

Palm NFT Studio, co-founded by Joseph Lubin, offers services for artists to establish NFT marketplaces. Lubin was also a co-founder of Ethereum, the world's second-most popular cryptocurrency. An NFT, or non-fungible token, is a unique digital asset that exists on a blockchain and serves as a public ledger of authenticity and ownership.

The funding will be used to scale the company's operations, with a focus on expanding its team and investing in research and development. Dan Heyman, co-founder and CEO of Palm NFT Studio, stated that the company's structure is in line with the projected growth of the NFT space:

> Within three years, most NFTs will be given away for free. We will see a shift away from NFTs as exclusive collectables toward mass community engagement, and Palm NFT Studio is leading that evolution. We envision programs that mint millions of NFTs with utility; social objects that connect communities, drive engagement and reward true fans.

Palm NFT Studio has already made significant strides in the eight months since its launch, working with big names such as Damien Hirst and DC Comics. The company has also focused on establishing its compliance desks as agencies increase their regulatory focus on the cryptocurrency space.

Microsoft's investment in Palm NFT Studio marks its entry into the NFT market and demonstrates its interest in the potential of blockchain technology.

Microsoft's web3 plans with Ethereum co-founder's startup ConsenSys

Microsoft has joined the race to get a foothold in the world of blockchain and Web3. In March 2022, the tech giant participated in a $450 million funding round for blockchain startup ConsenSys, founded by Ethereum co-founder Joseph Lubin. This funding round more than doubled the valuation of ConsenSys to $7 billion.

ConsenSys develops software that runs on the Ethereum network, the blockchain platform behind ether, the world's second-largest cryptocurrency. The company has also created popular products such as MetaMask, the leading self-custodial wallet with over 30 million monthly active users, and Infura, a suite of tools that helps developers create applications for the Ethereum network.

The funding from this round will be used to hire 600 more employees and expand MetaMask with a major redesign and a plug-in extensibility system. It will also be used to build out ConsenSys' non-fungible token (NFT) business and accelerate the global adoption of Infura's development tools.

Microsoft's investment in ConsenSys is part of its strategy to establish itself in the Web3 space. In May 2021, Microsoft retired Azure's blockchain services and started directing clients towards ConsenSys. Both companies have since been working together to offer their users the Quorum Blockchain Service. Microsoft has also made other investments in the crypto space, including an early-stage investment in Palm NFT Studio, a startup co-founded by Lubin.

Microsoft's cloud technology used for the world's first blockchain-based investment product

Microsoft has been investing in blockchain and crypto startups, as well as developing its own blockchain technology. The company has led funding rounds for several startups, including ConsenSys, Palm NFT Studio, and Space and Time. These investments and partnerships are part of Microsoft's web3 strategy and its push to decentralize the internet.

In 2018, Microsoft helped launch the world's first blockchain-based investment product using its cloud technology. Nivaura, a UK financial technology firm, successfully registered, cleared, and settled two Principal Protected Notes (PPNs) linked to the FTSE 100, with one settled through traditional infrastructure and the other using a public blockchain. Nivaura's platform, built on Microsoft Azure, enabled the settlement of one note through Clearstream and an equivalent note to be registered, cleared, and settled on the public Ethereum blockchain.

Avtar Sehra, Chief Executive and Chief Product Architect at Nivaura, highlighted the cost savings of using the Ethereum blockchain for companies launching investment products. By reducing the need for middlemen and post-trade registration, clearing, and settlement costs, blockchain technology can significantly lower expenses. For example, a UK retail firm that used the technology to issue a bond reduced its post-trade administration costs from £30,000 to just £50 over the life of the instrument.

Nivaura chose to use Microsoft Azure because the platform complies with guidance from the Financial Conduct Authority (FCA), the UK's financial regulator. Azure's compatibility with financial regulations was a key factor in Nivaura's decision, ensuring that their product met the necessary standards and could operate commercially.

Microsoft's involvement in the world's first blockchain-based investment product demonstrates its commitment to blockchain technology and its potential to transform industries. The company has continued to develop and adopt blockchain solutions, such as the Coco Framework, which aims to address speed and privacy concerns associated with blockchain networks. By partnering with startups and utilizing its cloud technology, Microsoft is playing a pivotal role in driving innovation and accelerating the adoption of blockchain in various sectors.

Microsoft's acceptance of Bitcoin as a form of payment

Microsoft has been an early adopter of blockchain technology and cryptocurrencies. In 2018, the company began accepting Bitcoin as a form of payment, allowing users to purchase content in the Windows and Xbox stores using the cryptocurrency. This move signalled Microsoft's recognition of the growing popularity and legitimacy of Bitcoin as a means of payment.

Microsoft's acceptance of Bitcoin was a significant development in the evolution of digital currencies. It demonstrated that a major technology company was willing to embrace the potential of blockchain technology and the benefits it could bring to financial transactions. Blockchain technology offers enhanced security, transparency, and efficiency compared to traditional financial systems, addressing issues such as excessive transaction fees and long wait times for payments to settle.

By accepting Bitcoin, Microsoft contributed to the increasing mainstream acceptance of cryptocurrencies. This move also aligned with the company's strategy to stay at the forefront of technological advancements and provide its customers with innovative payment options. Additionally, it reflected Microsoft's commitment to exploring the potential of blockchain technology and its applications beyond just currency.

Following its decision to accept Bitcoin, Microsoft has continued to deepen its involvement in the blockchain and cryptocurrency space. The company has made significant investments in blockchain startups, such as ConsenSys, and has been an active participant in the non-fungible token (NFT) market. Microsoft's venture fund, M12, has led funding rounds for crypto startups like Palm NFT Studio, signalling its belief in the potential of this emerging technology.

Microsoft's involvement in the Enterprise Ethereum Alliance

Microsoft has been involved with the Enterprise Ethereum Alliance (EEA) since 2017. The EEA is a global community of blockchain leaders, adopters, innovators, developers, and businesses. It aims to accelerate the adoption of Ethereum in enterprises by providing professional and commercial support, advocacy, research, standards development, and ecosystem trust services.

Microsoft's involvement with the EEA is through its Azure Blockchain Engineering team, which announced its participation as a launch partner with the EEA. The team made the first reference implementations of Ethereum available in a public cloud through Microsoft Azure. Azure is an independent, blockchain-agnostic platform that initially supported Ethereum and has evolved to address the needs of enterprises globally.

Microsoft has also released Ethereum Proof-of-Authority on Azure, which allows users to deploy and configure an Ethereum blockchain network in minutes. This has the potential to increase the adoption of Ethereum by consumers and enterprises. With Ethereum being used by Microsoft's enterprise partners, it enables a range of applications such as electronic voting, employee compensations, cloud storage, smart contract-enabled agreements, and supply chain oversight.

Additionally, Microsoft has collaborated with the EEA on several projects. In 2019, they launched a token-building kit for enterprises, allowing businesses to design and create tokens. They also backed an Ethereum-based token to incentivize firms to participate in consortiums. More recently, Microsoft has been working on creating secondary markets for blockchain-based assets and enabling enterprises to mint their own Ethereum tokens.

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