30What's Happening with Google and Crypto Technology

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What's Happening with Google and Crypto Technology

The crypto ecosystem may be Google's next step, according to Sundar Pichai, CEO of Alphabet, which owns Google.

Sundar Pichai, Google's CEO, confirmed last week that the company is exploring crypto and blockchain opportunities. As Alphabet, Google's parent company, announced record advertising revenue to push its market cap to $2tn (£1.4tn), Pichai stated: "Blockchain is such an interesting and powerful technology." As disintermediated (removing the intermediaries) peer-to-peer transactions become more mainstream, Google is making significant headway into the crypto ecosystem. A key part of Pichai's announcement was his desire to add value to web3 innovations by supporting blockchain solutions as best he could. In the future, Google plans to make its cloud computing services available to blockchainbased businesses. Additionally, they are looking into incorporating NFTs on their web platforms, as well as considering cryptocurrency payments.

Google does not have a first-mover advantage with its slow adoption of blockchain technology. Following other Silicon Valley companies, Google adopts web3 to catch up with crypto-pioneers. Sergey Brin, the co-founder of Google, acknowledged in 2018 that his company has not kept up with the blockchain revolution at a tech conference in Morocco.

Over a decade after Satoshi Nakamoto released the Bitcoin White Paper, Google has yet to embrace this disruptive technology. However, Google Cloud announced on 27 January that it would be creating a blockchainbased division called the Digital Assets Team. It comes at a time of rapid web3 innovation and growing consumer, producer, and

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merchant adoption of cryptocurrency, which could lead to mainstream adoption of cryptocurrency payments, artistic content, and distributed computing. The move into crypto is a way for Google to "establish critical traction" in this burgeoning market, says John Kicklighter, the chief strategist at DailyFX. Possibly, the company is seeking to assert its presence before the introduction of regulatory frameworks that could slow growth.

He told Yahoo Finance UK that multinational corporations like Google are "moving quickly to establish traction in this burgeoning area of tech not only to establish a competitive advantage but also to establish critical traction before slow-moving regulations stifle growth."

According to him, Google's announcement shows that companies are trying to make progress in these areas before governments increase their ability to resist aggressive crackdowns. Google could face scrutiny if the early investment does not pay off quickly, but the company has been known to invest in projects for the long-term, sometimes with outsized returns.

Blockchain Companies

Google announced last Thursday that it would enable blockchain companies to deploy their nodes "on the cleanest cloud in the industry.” By using Google's "secure, and sustainable infrastructure,” the internet search giant plans to participate in the crypto-ecosystem and help blockchain developers scale up their businesses.

It will support data transfers, cryptocurrency transactions, and digital assets like NFTs in order to maintain speed of settlement while maintaining scalability. Fundamentalists may argue, however, that having blockchain nodes on Google Cloud does not constitute a decentralized network if they are all maintained by the same company.

A network's level of centralization can be difficult to determine. According to Emiliano Billi, chief technology officer at Kollectiff, when a blockchain's nodes are in Google Cloud, we can talk about the concept of centralization, but that only affects the layer of computation power, not what happens inside the blockchain. "True centralization occurs only when one entity controls the majority of the mining process, confirms transactions, and validates blocks. Google Cloud, however, rents its service to different final users."

Dapper Labs, Hedera, and Theta Labs were mentioned in the announcement. Consumers and businesses benefit from blockchain, just as open-source development was fundamental to the early days of the internet, according to Yolande Piazza, vice president of financial services at Google Cloud. "As it becomes more mainstream, companies will need scalable, secure infrastructure to expand their businesses and support their networks."

NFTs

YouTube, which contributes almost 11% of Google's total revenue, is also planning to integrate NFTs. YouTube CEO, Susan Wojcicki, wrote in a letter last month that the platform was using web3 innovation "as a source of inspiration," specifically mentioning cryptocurrencies, decentralized autonomous organizations (DAOs), and NFTs.

Harmony One Co-founder, Stephen Tse. told Yahoo Finance UK that this would allow the company to reach "an entirely new consumer base, shifting the public's perception of what web-2 companies can do, and allowing them to keep up with emerging technologies."

Cloud computing provider Google said it would look into the possibility of customers making and receiving payments using cryptocurrencies in the future. As Google's president of commerce, Bill Ready, said in January, "we are paying a lot of attention to crypto transactions, and we will continue to do so as user demand and merchant demand evolve."

As a result of its strategic partnerships with Coinbase and BitPay, Google has demonstrated its progress towards becoming a dominant player in cryptocurrency. Giving users access to cryptocurrencies in digital cards, providing an alternative payment option, aligns with its vision of creating digital currencies.

Currently, Google is trying to shift from advertising to other growing markets in order to diversify its revenue sources. In order to create a blockchain division, Google Cloud will combine capital, computing expertise, and political influence. There are many challenges associated with cryptography, including anonymity for users, publicly accessible ledgers, permissionless transactions, and decentralized ownership of intellectual property and data.

According to Klaus Schwab, chairman of the World Economic Forum, a fourth industrial revolution is underway. Blockchain-based innovation will be critical to achieving this dramatic change. The cryptocurrency revolution is expected to bring sweeping changes to society. A few examples of this disruption include decentralized finance (DeFi) and decentralized film (DeFilm).

We cannot ignore the crypto-space any longer. Blockchain technology will bring this change to life. Globally, the World Economic Forum predicts that blockchains will store 10% of the world's GDP by 2025.

Technology giants, including Google, are now taking blockchain's potential to increase interoperability and connectivity, digitize economics, and bring smart automation, seriously. 

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Full Crypto Adoption Around the World is 'Unstoppable'

In a recent interview published to the wire services, former UK Chancellor, Philip Hammond, discussed the institutional finance sector's mass adoption of blockchain technology. Lord Hammond noted that the progressive technologies that characterize the cryptocurrency ecosystem will "bring many benefits and introduce significant efficiencies." Hammond warned, however, that onboarding these new mechanisms could be "hugely disruptive to the existing financial services infrastructure."

Hammond believes cryptocurrency characteristics of tokenization and distributed ledger technology are now "unstoppable". When conventional assets are tokenized, the factors currently associated with crypto assets will become normal patterns of trading.

Lord Hammond said, "This is going to happen. I think we're at a point where it will be unstoppable." Distributed ledger technology (DLT) is the key to cryptocurrencies, such as Bitcoin (BTC), bypassing centralized financial authorities. Hammond says the progressive technologies that are the hallmarks of the cryptocurrency ecosystem will "bring many benefits and provide significant efficiencies". Among the many benefits of distributed ledger technology are "increased security, transparency, and speed of settlement, as well as lower execution costs for customers."

Nevertheless, he cautioned that onboarding these new mechanisms would negatively impact the existing financial services infrastructure. "Incumbents of institutional markets would suffer the heavy burden of disruption, and these market participants will be concerned about the effect of disruption on jobs in the sector." Former chief financial secretary, Lord Mandelson, said that DLT and blockchain technology could provide significant opportunities for London and the UK financial services sector.

He argued that despite City of London firms' historically fast adaptation to disruptive technologies and adaptability, a malaise exists where firms are preoccupied with "what the future looks like" due to ongoing

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complications caused by Brexit. The current Conservative cabinet should ensure that London can lead in this burgeoning sector so that "regulators take notice and respond appropriately."

Hammond is now a senior adviser at Copper, a London-based provider of custody and trading infrastructure for digital assets. He said in the interview, “A growing sentiment exists within financial institutions that the technologies of the cryptocurrency ecosystem should be embraced. The traditional financial sector is on the brink of making a collective decision about the new disruptive technology and is recognizing that it is inevitable.

In the past, the impulse to smother it may have been strong, but now pretty much all of the grown-ups in this area are aware that it is inevitable." In reaching this reversal of attitudes, traditional financial institutions have come a long way. As blockchainbased solutions have developed over the years, cryptocurrency and decentralized finance have been associated with them. Now that the margins are no longer able to contain them, the enemy is at the gates for traditional financial institutions. Hammond said, “Conventional financial services players will have to consider how much they should embrace the new technology, or how far they should slow it down in order to gain a foothold.”

Chancellor Brown explained how attitudes toward central bank digital currencies (CBDCs) have also changed among global central banks. During his tenure as UK chancellor of the exchequer from 2016 to 2019, he said, “The environment was harsh for such nascent ideas, and most central banks were trying to smother them. Those days are gone. The central banks are now considering the possibility of fiat digital currencies surfacing in significant numbers around the world."

Earlier this year, the Bank of England and UK Treasury launched a joint task force to explore a possible central bank digital currency (CBDC) in Britain. China took the lead by conducting trials of its own 'digital yuan' in major cities. The Chinese government now plans to launch their digital fiat currency during the 2022 Winter Olympics in Beijing. Hammond suggested that other jurisdictions learn from Beijing's efforts to leverage the "rapid follow-up advantage" and apply it to their own CBDC projects. In response to a question about replenishing the UK's depleted gold reserves with a digital store of value, Hammond declared that he was not confident the Bank of England would receive widespread public support for its purchase of "current digital assets" like Bitcoin.

Aficionados of cryptocurrency use a phrase attributed to Ernest Hemingway when explaining how institutional finance will eventually adopt this revolutionary technology. According to Hemingway's The Sun Also Rises, bankruptcy happens "gradually, then suddenly." Using Hemingway's adage, the cryptosphere explains how acceptance of new technology will gradually build until the world suddenly embraces it. At some point, conventional assets will be digitized, and that is the form in which they will be stored.

Traditional finance is undergoing a rapid transformation. Regulators have approved two Bitcoin exchange-traded funds (ETFs) and Ether (ETH) custodial accounts. Many have become accepted as legitimate assets by many institutions over the past years. Because of the burgeoning crypto-sphere, government budgets on both sides of the Atlantic are declaring more bowering to meet increased public spending commitments. Retail investors rushing to the crypto-space have been prompted by rising debt burdens, supply chain woes, inflation-tainted savings, and increased interest rates. How much longer can major financial institutions stand by and watch from the sidelines? 