Cloud Computing, Crypto & Climate Change [May '21 edition]
Who's winning the Cloud Computing marketshare?
When I think about the nuanced applications of various advanced technologies today, whether its cloud computing, blockchain and crypto, artificial intelligence, 5G or even quantum computing, the common thread running amongst all these breakthroughs is ‘climate change’. Essentially the extend of carbon footprint you generate to deploy, run and maintain applications and business processes on these new technologies is daunting to say the least.
As hot summer days peep around the corner, I’m wondering what would other innovations such as real time payments at supersonic speeds mean for climate change and sustainability of the planet?
There are no easy answers, but I can do something better, by rounding up the latest in fintech & payments innovation from the month of May for your perusal :
Cloud Computing
Google’s play with the stars
In the rivalry between Google Cloud, Microsoft’s Azure & Amazon’s AWS, Google seems to have found another card up its sleeve with its recent partnership with Elon Musk’s Starlink satellite internet service.
Google will be supplying cloud computing and networking resources to SpaceX to help deliver internet services through Starlink’s satellite network.
The power of combining cloud with universal secure connectivity..
Starlink’s service could be invaluable for consumers that are in locations with very limited internet access, or businesses and organizations running projects in remote areas.
By having Starlink draw on Google’s cloud network, organizations can deploy applications within Google’s cloud to take advantage of the system’s high speeds.
Google is not the only cloud provider working with Elon Musk’s private space firm. Back in October, Microsoft stated that it was working with SpaceX to bring Starlink’s satellite internet system to modular Azure cloud data centers, which could then be deployed anywhere.
Google Cloud launches Vertex AI
Vertex AI is a new managed machine learning platform that is meant to make it easier for developers to deploy and maintain their AI models.
“Ultimately, our goal with Vertex is to reduce the time to ROI for these enterprises, to make sure that they can not just build a model but get real value from the models they’re building.”
Google says it takes about 80% fewer lines of code to train a model versus some of its competitors, for example, and then help them manage the entire lifecycle of these models.
Overall though, Amazon AWS is winning the public cloud market with reported revenue of $13.5 billion for Q1 2021. AWS remains the global market share leader in public cloud services at 33% followed by Azure at 13% and Google Cloud at 6%. – Synergy Research Group Report.
Apparently, AWS, Azure, and GCP (google cloud platform) all offer very similar range of products and services. If one provider launches a new product ahead of its competitors, you can be almost certain the other two will soon release a comparable product or service, just with a different name.
Crypto & Climate change
Bitcoin’s impact on environment
Elon Musk recently announced that Tesla will pause the acceptance of bitcoin to pay for Tesla vehicles due to Bitcoin’s impact on the environment (co2 emissions/carbon footprint).
"Tesla has suspended vehicle purchases using bitcoin. We are concerned about rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment."
Energy consumption between gold, bitcoin & traditional banking
Bitcoin has come under scrutiny with its recent bull-run primarily because of the interest from institutional investors and influential companies from across the world. Mining Bitcoin is an expensive endeavor, both from a monetary perspective but also from an energy consumption standpoint. Bitcoin requires large amounts of computational power to mine and to validate (verify & record) transactions.
P.S. Bitcoin mining is when computers solve complex math problems to generate new bitcoins on the bitcoin network.
However apparently nobody thought about calculating carbon neutrality of other asset classes & industries such as gold and banking. That is, until now.
Gold consumes much more energy than bitcoin. In comparison, the traditional banking system consumes more energy than bitcoin or gold.
Given how transparent bitcoin is, "it is easy" to calculate its energy usage, but the same cannot be said about the traditional banking system as well as the gold industry,
Bitcoin is most often compared to the traditional banking system (for payments, savings, and settlement) and gold (as a non-sovereign store of value). But the energy usage of these industries is opaque as they do not publicly disclose their energy footprints
Bitcoin's annual electricity consumption is currently at around 113.89 TWh (terawatt-hours). To help put this number into perspective, the report pointed out that the annual global energy supply is at around 166,071 TWh.
In comparison, the annual total energy consumption of the gold industry is around 240.61 TWh.
"Electricity data for the banking industry is scarce. With the publicly available information that we could find, we estimate the banking system uses 263.72 TWh of energy each year.
World of Crypto & NFTs
Dogecoin to fund a spaceship
Canadian engineering firm Geometric Energy Corporation has struck a deal with SpaceX to launch its DOGE-1 cubesat to the Moon in the first quarter of 2022. As the name implies, it's funded entirely by Dogecoin — the first commercial lunar payload paid for with the cryptocurrency,
NFTs of private parts?
Actress and model Cara Delevingne is selling a non-fungible token of her private parts to raise funds for her charity foundation.
Bitclout : Stock market for ‘people’
What if you could invest (more like bet) in the future value of a person or a celebrity? And if they hit big time in the future, you could cash in on the returns of the higher valuation of that person?
This is exactly what Bitclout is aiming to provide : Invest in “people” instead of companies by buying “stock” in them through their “creator coin” on Bitclout.
As they get more famous, their coin value increases, and you profit off their success. You are rewarded for being a fan and an early adopter.
Bitcoin is decentralizing money, and BitClout is decentralizing social.
Bitclout = Bitcoin + twitter + social clout
If you get more popular, your coin becomes more popular. Which means it’s more expensive.
So in essence, you’re rewarded for your social network equity.
Silvergate Capital partners with Facebook
Silvergate Capital, a crypto bank will be the sole issuer of Diem U.S. dollar stablecoin, formerly know as Facebook's Libra project.
Silvergate is a small $7 billion asset bank that specializes in banking crypto exchanges and institutional trades of cryptocurrencies that interact with one another.
Silvergate Exchange Network (SEN) is a real-time payments network that can clear transactions in U.S. dollars instantly around the clock, 365 days a year, between two users in the network. It's ideal for crypto traders and exchanges because cryptocurrencies trade around the clock.
Another highly valued cryptocurrency?
A digital token launched recently going by the name Internet Computer is already one of the largest cryptocurrencies in the world, with a market value of about US$45 billion.
The token and its related digital ledger are supposed to help anyone -- software developers or content creators -- publish anything they want onto the internet, without having to go through digital giants such as Amazon or Facebook, or to use servers or commercial cloud services. The idea is to avoid corporate walled gardens and to reduce costs,
Users could potentially build social-media and other services that compete with internet titans.
Connected Car economy
What if the whole car could become a payment vehicle?
Car IQ has developed a payment solution that allows vehicles and passenger car fleets to transact directly with card networks, banks and service providers.
Its underlying technology is based on a patented machine identity verification process that enables vehicles to automatically initiate payments for services such as tolls, fuel, parking and more.
Now if machines could initiate payments, would traditional card networks, issuers and processors be comfortable with that? I imagine there might be alternative payment solutions such as crypto/stablecoins/tokens running on alt-networks such as Ether (instead of traditional card networks such as Visa & Mastercard) that fit neatly into the connected car payment ecosystem.
In-car payments with Hyundai
Now Hyundai wants to take an innovative step in the direction of connected cars by launching its in-car payment system that will offer drivers the ability to find and pay for EV charging, food and parking.
In this case, however, the car-driver (human) would initiate the payment, which is akin to a user paying through their mobile phones at the point of purchase. And the actual payment might happen as a CNP (card not present) transactions (such as paying for purchase on an ecommerce site), rather than directly from car to the IOT terminal (where the car itself is a digital payment wallet).
However, the innovation here is the ability of the car and the IOT terminal at the partner location (eg. gas station, parking garage etc.) to identify each other through GPS based geo-fencing (through car plate # scanning and computer vision identification etc.) and the car to be able to automatically bring up contextual data (past purchase behavior, card details, membership and loyalty points, coupons and such) on the dashboard to help the car-driver make the payment in literally one click.
Central Bank Digital Currencies (CBDCs)
US CBDC pilot projects
United States-based nonprofit Digital Dollar Project will be launching five pilot programmes over the next 12 months to test the potential uses of a US central bank digital currency, the first effort of its kind in the country.
A partnership between Accenture and the Digital Dollar Foundation, the Digital Dollar Project was created last year to promote research into a US central bank digital currency (CBDC).
CBDCs are the digital equivalent of banknotes and coins, giving holders a direct digital claim on the central bank and allowing them to make instant electronic payments.
While debit cards or payment apps are a form of digital cash, those transactions are created by commercial banks based on money central banks credit to those banks’ accounts. They are not fully government-backed, can take days to settle, and often incur fees. Cryptocurrencies, meanwhile, are controlled by private actors.
A digital dollar could also boost financial inclusion in the US, where transaction fees impede the access of many Americans to mainstream financial services,
Bahrain’s CBDC
Central Bank of Bahrain (CBB) has revealed its plans to pilot a digital currency settlement project with US bank JP Morgan and local, Manama-based Bank ABC.
The three entities will test an instantaneous cross border payment solution, which will include the use of digital currencies.
Acquisitions, M&As & Funding news
Wealthsimple $4B valuation
It’s come as no surprise that Wealthsimple has had a big new funding round ($610M) from institutional investors but also individual investors such as Drake, Ryan Reynolds and Michael J. Fox.
AOL & Yahoo : Monolithics to be bought & chewed up by Private Equity
AOL and Yahoo, two of the most high profile dinosaurs of the recent past, have been bought by the private equity firm Apollo.
Private-equity firms typically carve up acquired companies and slash costs, at least partly through job cuts, to make them profitable before selling them off – sometimes in pieces – for big gains.
Yahoo lost 34% of its audience between 2017 and 2019,
The companies had combined market values exceeding $300 billion around the turn of the millennium, before they were overtaken by today's Big Tech giants.
today's purchase price for Verizon's entire media business is about equivalent to the difference between what Microsoft was willing to pay in negotiations to buy Yahoo for nearly $45 billion and the price that Yahoo's management was demanding.
Payment news
Climate action at POS
Adyen is looking to combat climate change at the checkout, giving merchants the ability to offer shoppers the opportunity to offset the carbon footprint of their purchases at the end of the sale.
Google Pay international money transfer
Google Pay has rolled out an international money transfer service for its US customers in alliance with Western Union and Wise.
The move allows the users of Google Pay app in the US to send money to users in India and Singapore.
Hello Bank! for auto-entrepreneurs
France’s biggest lender, BNP Paribas is targeting gig-economy workers with its online digital bank Hello Bank!
Hello Bank! has decided to address specifically the self-employed because the growth momentum is very strong in this category.
The online banking is aimed at both craftsmen, traders, liberal professions, freelancers, and people combining several activities.
Commonwealth Bank of Australia (CBA) to up its digital game
Two partnerships that CBA is excited about are Little Birdie, which would bring customers the best shopping deals from across the internet and Amber, which provides subscription-based access to wholesale electricity prices.
Amber will help to differentiate the bank’s home buying proposition by offering customers access to wholesale prices and additional discounts.
American Express launches “book a flight now, pay later” in US
American Express US consumer card members can now book flights at AmexTravel.com and pay later using Plan It® at checkout.
Integrating Plan It directly into the checkout experience will provide card members more payment flexibility for flight purchases of $100 or more, giving them the option to pay in monthly instalments with a fixed monthly fee before they make the purchase.
Plan It will be added to the checkout experience for prepaid hotel bookings on AmexTravel.com later this year.
Regulation
Regulation for payment service providers in Canada
the Bank of Canada would regulate all payment services companies in the country not already governed by other agencies.
The Retail Payments Activities Act (RPAA) legislation will mandate Canadian FinTech startups that provide payment processing to register with the Bank of Canada, which would be tasked with maintaining a public registry of payments service providers (PSPs).
The RPAA follows other regulatory and industry initiatives affecting Canada’s payments industry, including the Payments Canada-driven Payments Modernization initiative and amendments to the Payment Clearing and Settlement Act.
This month has been low-key, but I did manage to read and finish a rather interesting book. Some lessons from Onward: How Starbucks Fought for Its Life Without Losing Its Soul by Howard Schultz, founder and former CEO of Starbucks -
Growth is not a strategy, its a tactic. Growing for the sake of growing without having a foothold on your guiding principals & values is a recipe for disaster, as evidenced by so many public companies (Starbucks included) who have reckless growth on their agenda to generate short term profits to manage Wall street expectations. When undisciplined growth becomes a strategy, companies can lose their way.
Leadership is about instilling confidence in others. Hold people accountable, but give them tools to succeed.
Leadership will evolve, and it’s at its best when you can effectively balance entrepreneurial vision with the patience of execution.
How leaders embody the values they espouse sets a tone, an expectation that guides their employees’ behavior.
And what stuck the most for me was -
“… I’m at my best as a leader when I’m being challenged or fighting for survival. I’m comfortable with, and in a way enjoy, the rugged, steep ascent.”
So what are the leadership heuristics that you live by? Do drop me line.
Did you like this snapshot of the underlying shifts & currents brewing in the Payment, Cards & Innovation space? If you found this useful, feel free to comment, share and subscribe.
The climate angle on payments infrastructure is underrated. Real-time payment rails actually have an interesting efficiency argument, since fewer failed transactions, chargebacks, and manual reconciliation processes mean less computational waste across the entire ecosystem. The carbon cost of a disputed transaction touching 6 different systems is something nobody's calculating.
The Starlink-Google pairing is worth watching for merchant acquiring specifically because connectivity dead zones are a real revenue problem at the point of sale, not just an inconvenience. Curious whether you see satellite-backed redundancy becoming a serious conversation in financial infrastructure or just staying in the "remote areas" bucket for now.
The real-time payments and energy question is one nobody in this industry wants to touch honestly. RTP and FedNow run 24/7/365 on always-on infrastructure, which is a fundamentally different energy profile than batch settlement windows that let systems rest. The Starlink-Google angle is interesting but the last-mile connectivity problem it solves for payments in remote areas is real, I see merchants in rural markets getting crushed by connectivity gaps that make even basic card acceptance unreliable. Worth thinking about whether the carbon cost of always-on payment rails gets offset by the economic inclusion argument, because that tradeoff never shows up in the sustainability reports.