Google announced recently that it is going to allow a limited number of its cloud services customers to start paying for those services using cryptocurrencies. This new payment mode is slated for early 2023, and Coinbase Global Inc. (NASDAQ: COIN) will facilitate those transactions.
This deal could give Google an edge over its competitors in the cloud business segment because hardly any of those companies currently accepts digital assets as payment for any services rendered.
For a long time, Google and its parent company, Alphabet, have drawn most of their revenue from advertising. The cloud business offers the tech giant an opportunity to diversify its income sources. As a matter of fact, the share of Alphabet revenue coming from cloud services has grown to 9% from 6% in 2019. This makes the growth rate of the cloud services division higher than the income growth rate of Alphabet itself, which is an impressive achievement.
Coinbase, which previously had its cloud services hosted by the cloud arm of Amazon Web Services, will now transfer those functions to Google Cloud under the terms of the deal that these companies agreed upon.
Google plans to allow a small section of its Google Cloud Services customers to use cryptocurrencies when making payments. Those first clients will be actors in the web3 space, a term used to refer to the distributed and decentralized internet services that aren’t subject to the control of major companies such as Facebook and Google or central authorities such as central banks of countries. As time goes on, Google will open the crypto payments option to more clients.
Currently, Coinbase Commerce can allow 10 cryptos to be used as payment on its platform. These include Bitcoin Cash, Bitcoin, Ethereum, Dodgecoin as well as Litecoin. The past 12 months have seen Ethereum, Dodgecoin and Bitcoin lose nearly 60% of their value during what has come to be referred to as the crypto winter.
While the details of the deal struck between Google and Coinbase were not released to the public, it is expected that Coinbase will earn a commission from each transaction that takes place as customers of Google Cloud Services use cryptocurrencies to pay for the services rendered to them.
Google is also considering leveraging Coinbase Prime to offer digital asset management services. If this plan materializes, Google will join the ranks of Tesla, Coinbase, Block, Microstrategy and other companies that have cryptocurrencies in their asset portfolios. Google has also set up focus teams to attract and create business for the company as a provider of the tools that web3 developers can use to develop and launch their own blockchain projects.
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