Google chooses Coinbase to take cloud payments with cryptocurrencies

Google said Tuesday that it will rely on Coin base to start letting some customers pay for cloud services with cryptocurrency in early 2023, while Coinbase said it would draw on Google’s cloud infrastructure.

Coinbase stock rose a whopping 8.4% in Tuesday’s trading, though the stock is still down more than 70% for the year.

The deal, announced at Google’s Cloud Next conference, could succeed in luring cutting-edge companies to Google in a fierce, fast-growing market where Google’s top competitors currently do not allow customers to pay with digital currencies. The cloud business is helping to diversify Google parent Alphabet away from advertising, and it now accounts for 9% of revenue, up from less than 6% three years ago, as it expands faster than Alphabet as a whole.

Coinbase, which generates the majority of its revenue from retail transactions, will move data-related applications to Google from market leader Amazon The Web Services cloud, which Coinbase has relied on for years, said Jim Migdal, Coinbase’s vice president of business development.

The Google Cloud Platform infrastructure service will initially accept cryptocurrency payments from a handful of customers in the Web3 world who want to pay with cryptocurrency, thanks to an integration with the Coinbase Commerce service, said Amit Zavery, vice president and general manager and platform manager. on Google Cloud, in an interview with CNBC. Web3 is a buzzword that has come to stand for decentralized and distributed internet services that cannot be controlled by large internet outfits such as e.g. Facebook or Google.

Over time, Google will allow many more customers to make payments with cryptocurrency, Zavery said. Coinbase Commerce supports 10 currencies, including Bitcoin, Bitcoin Cash, Dogecoin, Ethereum, and Litecoin. Bitcoin, Dogecoin and Ethereum prices have all fallen over 60% in the past year.

The terms of the agreement were not made public. But like other Coinbase Commerce schemes, Coinbase will earn a percentage of the transactions that go through it, Migdal said.

There was no guarantee that Google would go with Coinbase for the payment portion of the deal. PayPal, for one, offers businesses a way to take payments with digital currencies. “We looked at other companies for the cryptocurrency side of it,” Zavery said. Ultimately, he said, Coinbase had the greatest capacity.

Google is also exploring how to use Coinbase Prime, a service that securely stores organizations’ cryptocurrencies and allows them to execute trades. Zavery said Google will experiment and “see how we can participate” in managing cryptocurrency assets. Block (the payment company formerly known as Square), Coinbase, Micro strategy and Tesla is among the companies that have added digital currencies to the balance sheet. It can be a risky endeavor. Coinbase announced a $377 million write-down related to a decline in the value of its cryptocurrency holdings in August.

Google had previously indicated in May that it was investigating the possibility of adding support for digital currency payments. Migdal said Coinbase had been in discussions with Google for months, with talks about support for merchant transactions, cloud use and the Prime service all happening in parallel. “We decided to bring them together,” he said.

Blockchain technologies such as non-fungible tokens, or NFTs, have become a bigger focus for Google’s cloud division. In the past, Google’s cloud manager, Thomas Kurian, has pushed for growth in large industries such as media and retail. This year, it announced the formation of teams to drum up blockchain business and build tools that third-party developers can draw on to run blockchain applications.

SEE: Coinbase CEO Brian Armstrong reveals new details on pivot to subscriptions: CNBC Crypto World