Google Has Quietly Become the Second Largest Corporate Investor in Blockchain Technology

Is Google secretly developing blockchain technology? That’s the claim made by blockchain investment bank NKB Group in a report from earlier this week.

In a blog post, NKB Group cited a report from investor watch group CB Insights. That report, among other interesting information, claims that Google is the second largest corporate investor in blockchain technology.

In fact, Alphabet has already reportedly acquired a number of distributed ledger technology startups, but they’re just waiting to announce those acquisitions.

The report goes on to claim that Google has already invested in some of the blockchain industry’s biggest names, including Gyft, Blockchain, Ripple, LedgerX, Buttercoin, and Veem. NKB Group cites “a source at Alphabet” in addition to the CB Insights report.

Some believe Google sees potential in integrating blockchain technology into its cloud business. However, NKB Group disputed that proposal:

“Blockchain has no role under the hood of the cloud provider’s infrastructure. A computational service that would have the distributed ledger at its heart is a fictional concept.”

So why is Google partnering with blockchain technology firms? Here’s what NKB Group believes:

“The reason Google partners with companies who build blockchain platforms, is just to have them available on their cloud marketplace, as preconfigured bundles to save developers some time with the installation.”

As evidence, NKB Group cites Google’s recent announcement of a partnership with Digital Asset, another distributed platform provider. The announcement falls into the category mentioned above: Google wants to have the distributed platform available on its cloud marketplace. This, according to NKB Group, has “been largely misunderstood by the media.”

The Cloud is Ideal for Developing Blockchain Apps, But Not for Running Full Blockchain Networks

Google’s cloud platform is ideal for developing, testing, and deploying an application because it provides quick deployment, cloning, snapshots, and other useful tools while giving companies a pay as you go operating model.

All of this makes Google’s cloud platform ideal for decentralized app and blockchain app development. However, the platform has limited use for actually running full blockchain networks.

There’s a simple reason why cloud platforms aren’t ideal for running decentralized networks: it’s a contradiction of the fundamentals of a decentralized network:

“But [a cloud platform] has limited use to actually run full blockchain networks, as having a distributed ledger under one cloud roof contradicts the blockchain principle of distributed control. The cloud is a good base to develop blockchain apps on and run some of its nodes, that’s all.”

Google is Developing Blockchain Technology for Online Advertising

Google’s core business is in online advertising. NKB Group believes that Google is exploring the use of blockchain for their online advertising business.

Distributed technology could revamp Alphabet’s advertising empire. Google loses billions of dollars per year due to ad fraud. Online advertising ecosystems can be messy. Google could use blockchain technology to make online ads more transparent and credible.

With blockchain, Google would be able to share data among actors at different levels of the online ad food chain. No party is in full control. When a single party is in full control, it leads to a lack of trust.

Google may also see potential in smart contracts. Smart contracts could be used to automate multiple aspects of the online advertising ecosystem. Google could use smart contracts to automate ad delivery, for example, and to arrange payments for publishers.

“The idea of blockchain in online advertising is so tempting that deciphering Google’s secret blockchain strategy may actually be quite easy — the ledger is perfect for their very core business, which feeds them with 80% of their revenue — the content advertising.”

In any case, the news that Google is the second largest corporate investor in blockchain technology is significant. While we know Facebook has its own blockchain division exploring the use of blockchain technology, we haven’t seen any indication of Google implementing similar technology. This new report suggests that not only is Google exploring the use of blockchain, but that they’re one of the industry’s largest investors.