What happened

Shares of cryptocurrency exchange Coinbase Global (COIN 2.01%) were up 5% as of 2:40 p.m. ET on Tuesday, although the stock had been up as much as 8% earlier in the session. The jump is notable considering the overall market is flat, as of this writing. And Coinbase stock's jump likely has everything to do with a partnership with Google, which is part of Alphabet.

So what

According to an official press release from Google Cloud, Coinbase has been chosen to help the company "drive Web3 innovation." Web3 refers to internet application infrastructure that's based on blockchain technology, but it can be a nebulous term. Fortunately, the press release details what exactly the two companies have in mind. 

Google Cloud customers will be able to pay for these services with cryptocurrency through Coinbase's Coinbase Commerce product. This is a product that already integrates with Shopify and WooCommerce and allows Coinbase to generate revenue by charging transaction fees each time cryptocurrency is used as a payment option.

On the other side of the partnership, Coinbase is leaving Amazon Web Services (AWS), according to CNBC, and moving to Google Cloud. Coinbase already offers cloud services to its customers to build Web3 products, but by partnering with Google Cloud, Coinbase will be able to offer greater features, including better analytics tools.

Now what

The company generates most of its revenue from transaction fees. Coinbase Cloud attempts to diversify its revenue away from transaction fees, but it's still a small product. Therefore, I'd say this partnership moves the needle more for Coinbase than it does Alphabet.

That said, just because Google Cloud's customers can now pay with cryptocurrencies, that doesn't mean they will. So the material benefit to Coinbase's business is still unclear.

However, on a more encouraging note to Coinbase shareholders, Google Cloud's head of platform told CNBC that the partnership could grow from here. Specifically, it's looking into Coinbase's custodial services with Coinbase Prime. So there may be more that comes out of this partnership than what was nailed down today.