Why Google is Building its Own Blockchain?

By Shobhit Seth | March 22, 2018

Alphabet Inc.’s Google is working on a blockchain-related technology that is

aimed at supporting cloud business, according to Bloomberg News.

Blockchain- based services have enabled numerous startups to offer novel online
services, assuring customers that their information is more secure and more
efficiently managed compared to the traditional methods of online data hosting.
Such new offerings are proving to be a tough competitor for various technology
companies, especially the ones operating in the hosted solutions space, like
the cloud-based data storage.

Why is Google Working on Blockchain?

Digital ledgers like blockchain allow the secure recording of transactions and
processing of data points over the Internet or other private networks. Because
they are more secure and efficient in storing and retrieving key business data
and content, businesses are increasingly moving to digital ledgers and
blockchains.

Additionally, businesses are also wary of the risk of having only a single
company host their key business data. The decentralized nature of blockchain is
preferred by such businesses for better security and risk management of their
content.

With a growing number of online services now available on the blockchain

platform, it poses a natural threat to the traditional internet-based businesses.
Technology giants like Google are taking an inclusive approach to fend off such
competition. If you can’t beat them, join them!

Google is said to be venturing into the blockchain space to complement its cloud
business, as it faces stiff competition not only from other cloud providers, like
Microsoft Corp, but also from the many other new-age blockchain service
providers. (For more, see How Amazon Competes with Google.)

“The Alphabet Inc. unit is developing its own distributed digital ledger that third
parties can use to post and verify transactions,” according to a person familiar
with the matter quoted by Bloomberg.

The company is also expected to offer a white-label version of its distributed

digital ledger. White labeling is the practice allowing of a developer or
manufacturer allowing other companies to rebrand a product or service as their
own.

With such white-label offerings, Google, which is known to host all of a client’s
data on its own servers and data centers, may also be open to offering private
blockchains. These private blockchains may be completely owned, controlled,
and operated by the clients, either over the various servers spread throughout
the Internet or hosted securely on a private network. (for more, see Public vs
Private Blockchains: Challenges and Gaps.)

Google Actively Pursuing Blockchain

Blockchain has been on Google’s radar for a long time, as it comes as a natural
extension to its cloud-based services.

The same source also mentions Google's recent acquisition and investment
spree in startups with blockchain expertise.

Though many of these unannounced deals remain outside of public knowledge,

a CB Insight report ranks Google in the second place in the list of most active
corporate investors in the blockchain space between 2012 and 2017. SBI
Holdings takes the top spot, while Overstock.com Inc (OSTK), Citigroup Inc (C),
and Goldman Sachs Group Inc (GS) rank behind Google. Google has also hired
many blockchain experts.

“Like many new technologies, we have individuals in various teams exploring

potential uses of blockchain but it’s way too early for us to speculate about any
possible uses or plans,” a Google spokesman told Bloomberg.

There are also hints that Google may come out with an enhanced version of
blockchain. Sridhar Ramaswamy, Google’s advertising chief, said at a recent
conference that his division has a "small team" looking at blockchain, but noted
the existing core technology can’t handle a lot of transactions quickly.

Over the last decade, the blockchain market has grown rather slowly. However, it
is poised to surge ahead rapidly over the next few years. From an estimated
value of $706 million as of 2017, the blockchain market is expected to grow
phenomenally and reach $60 billion worldwide as it creates new digital economic
infrastructure, according to WinterGreen Research.

Technology giants like IBM, Microsoft, and Accenture PLC, are currently leading
the pack of blockchain service providers. With Amazon already offering services
to build blockchain applications, and Facebook Inc’s founder Mark Zuckerberg
also expressing interest in virtual tokens, encryption and other decentralized
technology, Google seems all set to get into the blockchain game.

Public vs Private Blockchains: Challenges and Gaps

By Joe Liebkind | March 3, 2018

Since its introduction, blockchain has undergone several iterations as the general
public and private corporations sought to take advantage of its valuable
infrastructure.

While its spectacular design has long played second fiddle to the speculative
sentiment driving valuations in cryptocurrencies, blockchain’s actual
technological rewards should not be discounted. If anything, the attention fixated
on the rampant rally in cryptocurrency valuations has brought increased attention
to the entire ecosystem, accelerating adoption and even raising a greater
likelihood of institutional participation.

Already, countless name brand global multinationals have entered the space in a
drive to revolutionize their offerings. IBM, for example, is one of the companies
at the vanguard of blockchain technology applications for business, especially
amid the growing drive to migrate more services to cloud-based
infrastructure. Even so, it is just one example of the growing corporate embrace
of blockchain, though it highlights the shift towards the deployment of private
blockchains that eschew many of the properties and principles popularized by the
earliest chains.

Building on Efficiencies
At its core, blockchain can be viewed as a decentralized store of information, or a
database that is updated in real-time and distributed across its user-base for
validated record-keeping. Distilling the concept even further, it can be a trustless
means to exchange value, both informational and asset-based. Above all, public
chains are especially valuable due to the transparency inherent in the
technology, with anyone able to view and verify all the data recorded on each
block.

One of the reasons blockchain has gained such prominence is that just like ERP
systems are designed to help enterprises connect different departments and
systems, the technology can serve as a similar hub. IBM’s collaboration with
global shipping giant Maersk and logistics provider Agility highlights the
intersection of multiple common interests, namely deploying the Hyperledger
Fabric 1.0 blockchain to reduce administrative costs by building a more efficient
mechanism to transfer information.

Blockchain is a capable architecture that enables frictionless relationships,

whether between company units and service providers in the case of private
blockchains, or communities separated by national boundaries when referencing
public chains.

Public blockchains are extraordinarily valuable because they can serve as a

backbone for nearly any democratized solution. Whether verifying an identity,
helping internet surfers gain control over their own data through solutions like
VALID, or even using MATRYX to enhance collaborative efforts between
researchers, public blockchains are at the front line of the revolution because of
their permissionless design that allows anyone to participate.

Nonetheless, public chains are not without drawbacks. Early entrants like bitcoin
and Ethereum reveal several limitations that are harming adoption efforts. One
of the biggest problems is efficiency and the amount of processing
power required to run these networks.

Resource-intensive and expensive proof-of-work consensus for transaction

verification means that despite its popularity, bitcoin is still not a viable
replacement for traditional currencies. If you’re a trader, you’ve probably already
encountered these issues in one form or another, either because of network
sluggishness or high fees accompanying trades.

Although newer, lighter blockchains like Qtum are overcoming the amount of
processing power needed to host public blockchains, private blockchains have
already overcome this hurdle out of necessity. (See also: What Is Qtum? How
the Cryptocurrency Differs from Bitcoin.)

By reducing their focus on protecting user identities and promoting transparency,

private blockchains prioritize efficiency and immutability. These are important
features in the realm of logistics, for instance, which requires low-cost exchange
of tracking information in real time. However, the permissioned nature of these
chains implies that they are much less transparent and not designed for broad
adoption and openness, thus limiting their potential reach and application.

Bridging Inclusivity and Exclusivity

Public blockchains are just that: designed for public consumption. By their
inherent design, they allow anyone to participate in the community in nearly any
capacity, thereby contributing to increasing rates of adoption. Many of the
projects that have emerged aim to provide decentralized utility to as many users
as possible, but they remain constricted by scalability and trust issues. Though
second-layer solutions have remedied some parts of these problems, they are
still not enough.

Private blockchains, while purposefully designed for enterprise applications, lose

out on many of the valuable attributes of the permissionless systems simply
because they are not widely applicable, but are instead built to accomplish
specific tasks and functions. Companies like Brazil’s Construtivo use private
blockchains to solve specific issues such as transparency and easier auditability
of records in infrastructure projects.

Construtivo utilizes a platform built by MultiChain, which allows for permissioned

blockchain creation for specific use cases, as opposed to larger public chains
that offer broad applicability. However, despite the drawbacks of a more closed
ecosystem and the associated limitations, the next big leap in blockchain intends
to overcome these constraints, narrowing the gap between public and private,
even potentially enabling them to interact.

One of the major complaints about blockchains is their inability to share data, or
lack of compatibility, a common challenge faced by both private and public
chains. If blockchains are a means to transmit and transfer value, whether digital
or physical, eventually a conduit must be formed to bridge disconnected systems
to expand the reach of existing applications. The most oft-cited example is
exchanging value from one cryptocurrency to another.

Although there are many different tradeable cryptocurrency pairs, either pegged
to fiat currencies or other competing cryptocurrencies, the process of transferring
value from say bitcoin to an ERC20 token may involve multiple steps that add
costs instead of subtracting them through seamless transfer. (See
also: Blockchain Is Changing How Dating Apps Work.)

The growing movement towards building solutions bent on delivering cross-chain

functionality means that many of the existing obstacles currently governing the
exchange of value will gradually fade. In effect, cross-chain functionality could
gather together the best features of blockchains, both private and public for the
purposes of exchanging value across disconnected ecosystems. Ripple has
already made notable strides to this effect, with Interledger already
testing transactions across multiple ledgers simultaneously in different
currencies.

Other solutions are tackling similar challenges from a different perspective by

focusing on promoting the Internet of Value. By developing an open code public
chain designed for cryptofinance applications and third-party developers to
contribute to the ecosystem, FUSIONfocuses on building interoperability to
improve compatibility between the values transferred on various chains. With
solutions like multi-token smart contracts, off-chain data support, and even
parallel processing capabilities, FUSION intends to accomplish the early goals of
disintermediation touted by blockchain within a single platform.

“The FUSION Foundation hopes to create a 5I (inclusive, interoperable,

independent, intelligent, innovative, independent) public chain for the
cryptofinance in the era of the Internet of Values under the guidance of 5D
(distributed, democratic, disintermediate, decentralized, democratic,
disappeared),” said Dejun Qian, CEO of FUSION, in a recent interview.

Bumping Up Against The Limits

Although noble in its original quest, blockchain’s advance is bumping up against
the barrier of limitations. Decentralized formats like blockchain offer immense
potential, but the key to unlocking all its capabilities depends on developing
systems designed to link disconnected chains.

Interoperability has long been the missing key to overcoming the hurdles faced
by both private and public blockchains by empowering them to interact and
exchange values across platforms seamlessly. Though separated by their
functionalities and purposes, the potential to merge public and private
blockchains with innovative new solutions designed to accomplish cross-chain
exchange and greater compatibility holds great promise for all interests, both
individual and corporate.

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