It has been announced that Google accepts crypto. Even while Google’s Cloud Next conference may not attract as many attendees as Apple’s yearly event or even Tesla’s AI Day, this year’s conference did result in some intriguing advances.
Given that Google is now among the venerable titans of the computer sector, the news that they intend to start accepting cryptocurrencies as payment for certain of their cloud computing services may come as a surprise to some.
They will be depending on Coinbase, which is anticipated to be operational in early 2023, to handle these transactions.
Both businesses stand to gain significantly from this as they seek to diversify their business methods and grow their product lines. For Google, it gives them access to rapidly expanding businesses in the Web3 industry, which many still think has significant promise despite recent setbacks.
From Coinbase’s point of view, it will give them a revenue source that isn’t based on trading volume. This is crucial for the viability of the business, which recently let go of over 1,000 staff as a result of the crypto winter’s sharp decline in trading volume.
Google accepts crypto: What is known about the deal?
The success of Google’s cloud computing division is considered as being crucial. The industry is constantly expanding, incredibly profitable, and enables them to diversify their revenue sources away from advertising.
By enabling businesses in the cryptocurrency industry to pay for their cloud storage using digital currency, Google is able to close a market gap. There are no significant competitors who let businesses to do this.
It’s significant because a core mindset that seeks to move away from utilizing fiat currency, such as the U.S. dollar, underpins the mentality of many crypto and Web3 companies. Many of these companies would want to use services that accept cryptocurrency payments if given a chance, but as of today, they are just not available on the necessary scale.
The offer won’t be made widely at first. Google intends to make the service available to a small group of Web3 customers whose payments will be processed by Coinbase Commerce. Ten different digital currencies, including all the well-known ones like bitcoin, bitcoin cash, ethereum, litecoin, and yes, even dogecoin, are supported by this platform.
Thus, it enables Google to offer a service for which they do not currently have the capacity, expanding their user base and boosting income. In order to diversify their own revenue stream away from retail trading fees, Coinbase will charge a portion of the fees that pass through their network.
It functions in a manner akin to that of any other payment processor, including Apple Pay, Amazon Pay, Visa and Mastercard, as well as Amazon (AMZN -1.3%) and Apple (MA -2%). Each of these networks receives a little commission for facilitating the transaction, which is how they all work.
The sole distinction in this case is that these transactions use cryptocurrency instead of fiat money.
This could only be the start of Google’s entrance into the crypto and Web3 industries. As part of the new relationship, they have also announced that they intend to think about how they might assist other corporations in managing their crypto holdings.
Although this field is still in its infancy, ardent Bitcoin supporters think that as time goes on, we can expect to witness an increase in the number of businesses that have bitcoin on their balance sheets. The adoption of this method has so far only been made by a small group of, albeit sizable, businesses, such as Tesla, Coinbase, Microstrategy, Block, and Riot Blockchain.
How to store these assets presents a dilemma for these businesses. In traditional finance, assets are held on a company’s behalf by reliable middlemen. At any given time, large banks like JP Morgan Chase, Goldman Sachs, and Bank of America (BAC -2.9%) retain billions of dollars in cash on behalf of companies like Amazon, Apple, and Microsoft (MSFT -1.7%).
Since these institutions are highly regulated and regarded, businesses may be sure that their money will be secure. With crypto, things become a little more challenging.
Decentralized systems underpin digital currencies by nature. This implies that no trusted third parties are necessary to facilitate transactions, and generally, it is up to the holder to ensure the security of the assets.
There are alternatives, such as holding assets on exchanges, but the industry is infamous for being associated with numerous high-profile catastrophes in which investors lost millions of dollars.
There may be a chance to introduce a dependable third party into the crypto storage space, similar to the hole in payment services that Google is trying to fill. Ironic considering that Bitcoin was developed to prevent just that.
The Coinbase Prime program already provides a service that makes this possible. It will be fascinating to watch whether Google decides to promote this service and if it might persuade additional traditional enterprises to test the waters with cryptocurrencies.
Competing for market share in the cloud
The next significant technological battleground is evolving into cloud computing. The industry now has a combined value of $203.5 billion after experiencing rapid growth in recent years. An IT service called cloud computing enables businesses to provide resources like data storage on essentially a rental basis.
It functions essentially in the same way as Google Drive or the cloud on your iPhone. You may still access the files by offloading them to Apple’s or Google’s servers, which eliminates the need to add more storage space to your phone or laptop.
The same applies to businesses. As companies expand, they can just keep renting more and more storage from a cloud computing provider rather than having to build out enormous server rooms to house all of their data. As a result, companies may scale up quickly as their business expands and don’t have to pay for storage that they don’t yet use.
It’s a lucrative industry, and Silicon Valley’s A-list of corporations dominate the market share of the cloud computing sector.
With 34% of the market, Amazon Web Services leads the pack, followed by Google Cloud with 10% and Microsoft’s Azure with 21%. Another 17% is made up by a combination of Alibaba, IBM (IBM 0.0%), Salesforce, Tencent, and Oracle (ORCL +0.3%).
The industry is anticipated to continue growing; according to some predictions, its value might reach $1,143 billion by 2028. That is a 15% yearly compound growth rate.
Even though cloud computing is still a young technology, it has grown into a $200 billion industry.
Another illustration of the tech sector’s capacity for innovation Companies will find new services to sell and efficiencies to share that will generate new sources of revenue as long as technology continues to develop and advance.