Over the course of the last year, investors have become increasingly fascinated with the emergence of both cryptocurrencies and the underlying blockchain technology that enables the exchange of digital dollars. The ability to securely record transactions has the potential to revolutionize any number of existing industries, and is being explored by a number of big tech companies.

While estimates vary, the market for blockchain technology could produce compound annual growth of 42.8%, reaching $14 billion by 2022, according to data provided by Netscribes. Some forecasts are even more enthusiastic, estimating that the market will grow from $708 million last year to $60.7 billion by 2024, according to a report by Wintergreen Research.

Now, Google parent Alphabet (GOOGL 0.22%) (GOOG 0.21%) is climbing aboard the blockchain train.

A long steel chain with one link containing cryptographic symbols.

Google is getting into the emerging technology of blockchain. Image source: Getty Images.

What is blockchain?

Blockchain is a distributed database that resides on numerous computers at the same time. This database is designed to record and verify transactions for a wide variety of industries, not just financial ones like some cryptocurrencies, such as bitcoin. This digital ledger can be accessed by multiple users, who can add new records, or "blocks" that are attached to the growing database in a chain. Once a block is verified and has been added, it is preserved forever as part of the chain. Each block is timestamped and cannot be altered once it is added to the chain, making it virtually impossible to change the data once it has been finalized. My colleague Adam Levy has penned a much more extensive and detailed explanation of blockchain.

Because blockchain provides a permanent record of transactions, it has implications far beyond digital currency. The technology can be used in foodborne illness outbreaks to track products back to their source, or be used to digitize and track virtually any supply chain.

Clouds in the forecast

Search giant Google is working to develop in-house blockchain technology to support its growing cloud computing business, according to a report by Bloomberg. The company could potentially use the distributed digital ledger to securely record transactions that are processed online, and help to secure information stored on the company's cloud.

During the conference call to discuss its 2017 fourth quarter financial results, Alphabet CEO Sundar Pichai announced that Google Cloud was "already a $1 billion-per-quarter business," and "is the fastest growing major public cloud provider." The desire to continue this rapid growth gives the company an incentive to offer additional cloud-based services -- particularly those that its nearest competitors didn't yet offer -- like blockchain.

Cloud shape superimposed over computer circuitry.

Blockchain could find its way to Google Cloud. Image source: Getty Images.

A buying spree

Over the past five years, Alphabet has been among the top investors in start-ups working on blockchain technology, according to a report late last year by CBInsights. The company has made six investments in the space via its Google Ventures (GV) arm. These include decentralized cloud storage provider Storj, cryptocurrency derivatives trading platform LedgerX, and Veem, a company working on faster and less expensive digital payment services for small- and medium-sized businesses. GV also invested in digital gift card platform Gyft, and Ripple, a company that settles international transactions for some of the world's largest banks.

When contacted about its plans, a spokesperson for Google said, "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." 

More to come

Alphabet is known for being at the cutting edge of developing technologies like artificial intelligence, self-driving cars, and cloud computing. It's easy to see why blockchain could be the next area of interest for the tech giant.

Cryptocurrencies might be getting all the headlines, but the future potential of blockchain has found its way onto Google's radar. Expect to hear more about the company's incursion into the space in the very near future.