Apple Bans Another Bitcoin Wallet, Stirring Protests But Perhaps Boosting Its Own Wallet

Apple Inc. removed from its vast mobile-applications market called the App Store the Blockchain mobile wallet for accessing the Bitcoin virtual currency, an action Blockchain claims will leave no native Bitcoin options for users of Apple’s iOS mobile devices such as the iPhone and iPad. Apple’s move quickly stirred protests in the small but growing and passionate world of Bitcoin users.

Blockchain’s removal, however, could reduce the competitive threat to a possible mobile-payments service from Apple, possibly at the price of provoking a migration of users of the Bitcoin virtual currency to iOS’s arch-rival, Google Inc.’s Android platform.

Apple gave no reason for the removal other than citing an unspecified “unresolved issue,” according to a Thursday post on Blockchain’s blog. An Apple spokesperson did not respond to a Digital Transactions News email seeking comment.

In the post, Blockchain said it has been in the App Store for two years and downloaded 120,000 times. (Disclosure: this writer has the Blockchain app and owns less than 1% of a Bitcoin.) “These actions by Apple once again demonstrate the anti-competitive and capricious nature of the App Store policies that are clearly focused on preserving Apple’s monopoly on payments rather than based on any consideration of the needs and desires of their users,” the post says. It later adds: “There was no communication prior to removal of this popular app, no indication of any problems and no opportunity to redress any issues, making a mockery of the claim that there was an ‘unresolved issue.’”

Blockchain claimed three other Bitcoin apps—Coinbase, Gliph, and CoinJar— “all have been sacrificed on the altar of innovation” by Apple.

(For an analysis of Bitcoin's prospects among merchants and acquirers, see “Bitcoin's Bid for Acceptance” in the February issue of Digital Transactions).

The news provoked an outpouring of support for Blockchain on social media. Bitcoin partisans also have started a petition on the Change.org Web site asking Apple to “allow Bitcoin wallets on the iPhone.” It had 3,000 signatures as of late Thursday afternoon.

After years of speculation about its payments aspirations, the secretive Apple in late January demonstrated an interest in mobile payments, but has not announced a specific product or service. Payments researcher Julie Conroy of Boston-based Aite Group LLC  says that removing potential rivals from its App Store might be one part of the product development. “The buzz out there is that this is a competitive concern,” she says. “Traditionally Apple has been very rigorous that if it competes with Apple, we don’t want it in the App Store.”

But Conroy sees such concerns about Bitcoin wallets as “overblown” because “Bitcoin isn’t really competitive with credit cards. It seems a little bit extreme to me.”

Apple also risks losing Bitcoin aficionados to smart phones and tablets running Android, the leading mobile-operating system. Reston, Va.-based research firm comScore Inc. estimates that 51.5% of U.S. smart-phone subscribers used Android devices in December, down 0.3 points from September, while No. 2 Apple had 41.8% of the U.S. market, up from 40.6% in September. “I think the beneficiary of this is going to be the Android platform,” says Conroy.

In fact, the Change.org petition says: “We need a mobile Bitcoin client, and if Apple won’t deliver one, we'll move to Android.”