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GOOG and Coinbasea coin Google has signed an agreement to accept cryptocurrencies for some of its cloud computing customers - This is a move that will allow Google to follow leading crypto and Web3 companies in using digital currency as a payment method.
- Coinbase will receive a percentage of these fees, which will help diversify its revenue based on trading volume.
While Google's Cloud Next conference doesn't draw as big a crowd as Apple's annual keynote or even Tesla's AI Day, there are still some interesting events this year.
Since Google is now one of the oldest supporters of the tech industry, it may come as a surprise to some that they have started accepting cryptocurrency as payment for some of their cloud computing services.
They will rely on Coinbase, which is expected to launch in early 2023, to facilitate these transactions.
This could be a huge advantage for both companies as they look to expand their offerings and diversify their business models. For Google, this gives them access to a fast-growing company operating in the Web3 space, which many people see as having potential despite its recent problems.
From Coinbase's perspective, this will provide them with a revenue stream that is not directly related to trading volume. This is important for the stability of the company, which recently laid off more than 1,000 employees due to a decrease in trading volume due to the crypto winter.
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What do we know about the contract?
Google's cloud computing business is seen as the key to their future success. This sector is constantly growing, very profitable and allows for diversification of advertising revenue.
This agreement with Coinbase allows Google to address a gap in the market by allowing companies in the cryptocurrency space to pay for cloud storage in digital currency. No major currency competitor allows the company to do this.
This is a big deal because it is at the heart of the philosophy of many crypto companies, and it is a fundamental philosophy that Web3 wants to move away from using fiat currencies like the US dollar. Given the opportunity, many of these businesses would choose a service that enables payments in cryptography, but this is not currently available at the required scale.
First, the offer will not be comprehensive. Google plans to serve some Web3 customers whose payments will be routed through Coinbase Commerce. The platform accepts ten different digital currencies, including all the names you would expect, such as Bitcoin.
So for Google, it allows them to provide offers that they don't currently have, which will expand their user base and increase their revenue. As for Coinbase, they will receive a percentage of what comes from their platform and diversify their revenue stream through retail payments.
This is similar to how other payment providers, whether Apple Pay or Amazon, work
The only difference here is that these transactions are done in cryptocurrency, not fiat currency.
Future cryptocurrency plans on the table
This could be the start of Google's entry into the world of cryptocurrency and Web 3. As part of the new partnership, they also said they plan to consider how they can get involved in helping other companies manage their crypto portfolios .
The field is still in its infancy, but bitcoin enthusiasts believe that over time we can expect more companies to keep bitcoin on their balance sheets. So far, the implementation of this strategy has been limited to a small but large number of companies, including Tesla, Coinbase, MicroStrategy, Block and Riot Blockchain.
The challenge for these organizations is how to protect these resources. Traditional financing relies on trusted intermediaries who hold assets on behalf of companies. Companies like Amazon, Apple and Microsoft
These institutions are highly regulated and trusted, which means companies can expect their money to be safe. Things get a little more complicated with cryptocurrency.
Digital currencies are decentralized by definition. This means that no trusted third party is required to facilitate transactions and the security of the asset usually rests with the owner.
Options such as holding assets in stock markets are available, but the sector has been known to be involved in many high-profile crashes where investors have lost millions of dollars.
As with the payment services Google wants to fill, there is a potential opportunity to include trusted third parties in the cryptocurrency vault. This is quite ironic considering that Bitcoin was created to prevent this.
Coinbase already offers a service that makes this easy through a program called Coinbase Prime. It will be interesting to see if Google decides to push the service and lure more conservative companies into the cryptocurrency waters.
The battle for cloud market share
Cloud computing is becoming the next big battleground in technology. The industry has grown dramatically in recent years and is now valued at $203.5 billion. Cloud computing is an IT service that allows companies to offer resources such as data storage on a rental basis.
In short, it works like your iPhone Cloud or Google Drive. Uploading your photos or documents to Apple or Google's servers means you can still access your files without increasing your phone or laptop's storage.
It is the same for companies. Instead of building huge server rooms to store all their data, they can rent more storage from cloud providers as they grow. This means they don't have to pay for storage they don't need yet and can scale quickly as their business grows.
It's a lucrative business and a who's who of companies dominating the cloud computing market in Silicon Valley.
Amazon Web Services is the dominant player with 34% of the market, followed by Microsoft Azure with 21% and Google Cloud with 10%. Alibaba, IBM
This growth is expected to continue, with some reports suggesting that the industry could be worth $1.143 billion by 2028. That's a compound annual growth rate of 15% per year.
What does this mean for investors?
This is another example of the innovative potential of the technology industry. As technology continues to develop and evolve, companies will find new services and skills to share, creating new revenue streams.
Cloud computing is still relatively new and is currently a $200+ billion industry.
This is one of the reasons why the technology industry can be an attractive investment. It doesn't make it any easier. The sector has recently experienced significant volatility and one of the industry's strengths is the ability of new players to enter and disrupt the status quo.
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