Google Just Gave Its Nod of Approval to Blockchain and Crypto Technology – Motley Fool

Returns as of 02/13/2022
Returns as of 02/13/2022
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Blockchain technology and the cryptocurrencies built on it have been a hot investment theme the past few years. However, outside of a handful of fintech companies that enable trading of cryptos or that buy and hold crypto, mega-tech business executives have had little to say about blockchain or internal projects they might be working on.
That might be about to change. The chief executive officer of Google parent Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG), Sundar Pichai, just made a public comment on blockchain when asked about future internet tech development. That doesn’t mean you should start throwing your hard-earned money at cryptocurrencies, but it is a nod of approval to the underlying blockchain tech that’s worth paying attention to.
Image source: Getty Images.
A big, bright spotlight has been shone on Alphabet’s knockout Q4 2021 earnings. A 32% year-over-year increase in revenue, driven by the more than $61.2 billion in Google advertising during the final months of the year, is no joke.  
But Google is always on the lookout for new opportunities. Its bustling YouTube business segment has paid off handsomely in recent years, and while Google Cloud isn’t profitable (yet), that division grew 44% year over year in Q4 to $5.54 billion. Clearly Google knows how to foster growth in emerging technologies.
To that end, a stock analyst asked Pichai about web3 on the earnings call. Web3 has become a woefully overused and cheapened term, but the original basic meaning refers to a decentralized version of the internet with complex services built on blockchain — a distributed electronic ledger that cryptocurrencies like Bitcoin and Ethereum use to record transaction data. Pichai’s response to the query is worth reviewing at length:  
The web has always evolved, and it’s going to continue to evolve. And as Google, we have benefited tremendously from open-source technologies, and so we do plan to contribute there. There’s several areas of interest. AR [augmented reality] is a big one at the computing layer. We’ve been investing there for a long time, we’ll continue to play a role. And it’s something both — not just with the computing layer, but services layer, be it Maps, YouTube, Google Meet, etc., I think, will contribute a lot.
On Web3, we are definitely looking at blockchain, and such an interesting and powerful technology with broad applications so much broader again than any one application. So as a company, we are looking at how we might contribute to the ecosystem and add value. Just one example, our Cloud team is looking at how they can support our customers’ needs in building, transacting, storing value and deploying new products on blockchain-based platforms. So we’ll definitely be watching the space closely and supporting it where we can. Overall, I think technology will continue to evolve and innovate, and we want to be pro-innovation and approach it that way.
Thanks to movies like Ready Player One and, more recently, Facebook’s rebranding to Meta Platforms, augmented and virtual reality have been billed as an early version of web3. While that’s not exactly an accurate depiction of what web3 is all about, Google has nonetheless been involved with various AR and VR projects over the years, and use of its software will no doubt continue in this computing format.
But more specific to actual web3 was Pichai’s comments on blockchain. While the tech was invented for recording and managing transactions (the first blockchain was the ledger system Bitcoin utilizes, developed by the pseudonymous Satoshi Nakamoto), it has far wider use in other services beyond finance. 
For example, things like automated execution of contracts between parties, data sharing and personal identification services, supply chain monitoring, management of large-scale networks in real time, or certification of property ownership (uh, non-fungible tokens, but other stuff, too) can all make use of a distributed ledger system. In this sense, we could think of blockchain technology as a further fragmentation of current cloud and edge computing networks, in which data and computing of data gets pushed from a local data center onto individual devices. Thus, Pichai’s indication that the Google Cloud team is working with customers in this department. In fact, just days before the Q4 earnings call, Google Cloud announced the creation of the Digital Assets Team, dedicated to blockchain development.  
Again, I wouldn’t take the Alphabet CEO’s comments as a reason to go load up on cryptocurrencies as an investment. Nevertheless, it’s an interesting (if not particularly specific) positive comment on blockchain from one of the world’s most important and powerful organizations. If you’re looking for a surefire long-term bet on the technology, owning shares of Alphabet might be the best ticket there is right now.

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