The power of Google is something that cannot be underestimated, so when the internet giant makes moves into the world of cryptocurrency, CFD traders, forex speculators and anyone interested in crypto will sit up and take notice. However, Google is also known as one of the largest data-collecting entities in the world, so the privacy-conscious atmosphere that surrounds the crypto sector might seem an unlikely area of operations for the company whose reputation is built on the microanalysis of information.
On February 5th, the Californian based tech giant launched a new range of search tools under its BigQuery Public Datasets program. This means that the blockchains of eight major cryptocurrencies can now be searched and analyzed with the result that patterns in transactions can be detected and relationships between addresses be worked out. As Google is already the go-to online tool for journalists, writers and researchers across the spectrum, this could be a very significant development for crypto indeed.
Surfing blockchains
Google’s move means that datasets covering the entire transaction history of Bitcoin Cash, Dash, Zcash, Litecoin, Dogecoin and Ethereum Classic are available to be searched by the general public. In all, eight of the major cryptocurrencies are covered, as Bitcoin and Ethereum’s datasets were released on the BigQuery platform last year.
At a basic level, this ability to surf the blockchains means that the way that cryptocurrencies are actually being used can be studied by a much wider group of people. However, some within the industry are concerned that this is just the first step towards some form of centralization, while others see it as an important move in the quest for transparency and wider acceptance for digital coins as a concept.
Blockchain ETL
As well as making the transaction histories of the eight coins and their blockchain searchable, the new Google initiative also includes another powerful tool called Blockchain ETL (extract, transform, load). This is the element of the package that allows users to analyze transactions patterns and the relationship between addresses. Largely built by independent developer Evgeny Medvedev, Blockchain ETL is perhaps the most significant aspect of Google’s move, as the ability to quantify patterns within a blockchain means that most crypto-related behavior can be identified.
In effect, this could allow the detection of mining pools by checking transaction flows between different addresses. Another example could include the identification of trading bots that might be being used to modify the price of a cryptocurrency in either direction. Obviously, this latter aspect would be of particular interest to CFD crypto traders or anyone else involved in digital coin investments.
Opportunities for development
Dr. Mervyn G. Maistry, the CEO and co-founder of blockchain-services company Konfidio, commented: “Having a public database opens many opportunities for development.” He continued: “the data can be turned into highly advanced blockchain analytics: distribution of assets across addresses, defining ownership of multiple wallets, qualitative and quantitative analysis of transactions, network current state tracking and analysis and much more”.
Google has already used its new tools to measure the Gini Coefficients of the eight BigQuery database covered currencies. This measures the equality or otherwise of wealth distribution and the company’s findings were that: “Dash is remarkably well distributed relative to all other cryptocurrencies examined here.”
New projects
Developers interested in creating and launching a new cryptocurrency or building a trading platform accessible to a wide audience will be able to use the datasets provided by BigQuery to their advantage. Maistry thinks that they will also enable Google to develop tools with more functionality that are even more powerful, and that this will have a positive impact on future crypto projects.
The idea that the new move by Google into areas involving blockchains is going to be helpful for those involved in the sector who might be developing of crypto and other related projects will be a welcome one, but the question has to be asked what’s in it for Google itself?
Blockchain potential
The CEO of the enterprise-focused smart contract platform Cypherium, Sky Guo, says:
“Google’s official emergence into the blockchain space reinforces the fact that tech giants have long realized the potential of blockchain tech.”
“More subtly, though, this move also suggests that the risk and suspicion surrounding the technology has generally softened, as the technical benefits of blockchain start to poke through into mainstream narratives”, Guo adds.
Some industry observers believe that Google’s latest moves will encourage other major corporations to take their own steps into the world of crypto too. Rutger van Zuidam, the founder and CEO of the blockchain-focused innovation program Odyssey, explained: “Google’s official emergence into the blockchain world might also inspire banks, governments, and other traditional industry players to take a second look at the potential of open public blockchains, as well as their own privately owned infrastructure.”
Centralization risks
Although the question of how to gain wider acceptance and increase volume usage of digital coins is often on the lips of CFD crypto traders and other forex investors, there could be negative consequences resulting from Google’s initiative and similar measures taken by others. Van Zuidam warned: “We also have to be really careful when we build dependencies to large data-collecting entities. The whole point of working with blockchain is to decrease these kinds of dependencies and to increase the sovereignty and privacy of the users.”
Centralization, or at least a level of control being able to be dictated by a centralized organization, is anathema to the ethos of cryptocurrencies for many of its early adopters and forward-looking supporters alike. B9Lab founder and crypto expert Xavier Lepretre is one of those who thinks that Google’s involvement in crypto could turn out to be a double-edged sword.
“Google’s blockchain discovery tools come with Google’s advantage: scale”, he said. “No doubt, plenty of developers will find ways to use, or even monetize, them. However, the tools also come with Google’s disadvantages, which are centralisation and the possibility of censorship.”