Kowtows to the Institutions
Google allowing crypto payments to its cloud services from Coinbase (COIN) doesn’t move the needle.
COIN is the crypto exchange platform that has run into a litany of problems recently from mass firing of staff to payment problems.
The news is a footnote to the carnage that is really happening front and center in the crypto market.
Funnily enough, why would a customer choose to pay for Google’s cloud services through Coinbase when an extortionate fee is levied on the Coinbase transaction?
Crypto isn’t cheap and it doesn’t pretend to be.
Ether (ETH) is infamous for its commission which they call “gas fees.”
In 2021, they charged an average of $63 for one transaction which is why it lags behind other cryptos like Bitcoin.
ACH transfers are free and so are debit and credit card purchases in most cases.
Even though El Salvador claims to be a crypto-first economy, most transactions are completed in cash which are US dollars.
At least crypto will now be allowed to transact on Google’s platform which is a victory in itself, but I don’t believe this will catch on like wildfire.
Crypto is up against a Sisyphean task.
The Google Cloud Platform infrastructure service will initially accept cryptocurrency payments from a handful of customers.
Over time, Google will allow many more customers to make payments with cryptocurrency.
Coinbase will earn a percentage of transactions that go through it.
It is high risk to hold crypto on the balance sheet.
Coinbase announced a $377 million impairment charge tied to a decline in the value of its cryptocurrency holdings in August.
Therefore, I expect Google to charge a fee to convert the crypto back to dollars once they accept the payment.
From the outside, this really does look like a marketing gimmick.
Blockchain technologies such as nonfungible tokens, or NFTs, have become a bigger focus for Google’s cloud division.
Previously, Google has pushed for growth in major 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.
However, I thought that crypto was going at its lone-wolf style hoping to create a parallel system to the fiat money system which they despise.
Apparently not.
Tying up with a mega tech corporate firm sounds like they are giving up to me.
Seems as if the founding investors are ready to cash out and leave the die-hard crypto believers for a more stable income stream.
Annuity like income stream is something many crypto firms lack and locating one is a hard sell.
Crypto was supposed to be “decentralized” but this appears to be a move that will offer Google the keys to Coinbase’s data while limiting them to lateral moves.
In short, this is a move that allows more centralization to the biggest crypto platform in the United States.
Growth was crypto’s calling card and that means parabolic growth possibilities are over.
Integrating with Google also means Google will have a deep insight into how they can use Coinbase to profit from digital currencies since Coinbase has agreed to onboard their data onto Google’s cloud infrastructure.
Honestly, this is a bonehead strategic move for Coinbase and my inclination would be to buy Google’s stock if one believes in crypto.
Desperation can trigger some unusual moves and we are seeing that in real-time, but analyzing the bleak short-term prospects for crypto, this might be a move for survival than anything else.
