Crypto Push Hinted by Alibaba Blockchain Deal

The cloud computing division of the Chinese e-commerce giant, Alibaba BABA -1.91%, has struck a deal with a crypto firm to work on advancements to Web3 ecosystems, marking a move by the Chinese giant into the blockchain sector.

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Earlier this week, Mysten Labs, one of the original developers of the Sui blockchain network, announced that Alibaba Cloud, the rapidly growing high-tech arm of Alibaba (ticker: BABA), had signed a memorandum of understanding with them.

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Sui is a blockchain that is referred to as a layer-1 blockchain, meaning that it stands alone as a network like Bitcoin BTCUSD +0.43% or EthereumETHUSD +0.68%, as opposed to a layer-two blockchain like Polygon, which sits atop other networks. Mysten is not only the developer of Sui, a project that has now been decentralized, but he is also working on infrastructure for Web3-an effort to provide a new vision of the internet that is based on decentralization along with the crypto economy at its core.

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To operate properly, decentralized systems, which are used by many cryptocurrencies, rely on a network of many individuals rather than a single entity to perform the necessary tasks.

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The company will offer cloud infrastructure services in support of Sui validators, which are key players in decentralized networks and are similar to bitcoin miners in the sense that they validate and secure blockchain transactions.

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“There will be increased collaboration between the two companies in order to develop sustainable Web3 ecosystems, which will include builders, communities, and other stakeholders,” Mysten said in a statement. “It is also expected that both parties will explore possibilities for collaboration in the e-commerce and payments sectors as well."

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For the Chinese tech group, this is an exciting move into the blockchain space, with potentially significant implications for the company's core e-commerce business and the payments sector if it paves the way for further innovation.

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“With the help of Mysten Labs, we will be able to introduce our security technology and proven solutions to the nascent Web3 space, enabling more immersive, user-friendly experiences for Web3 users,” Daniel Jiang, Alibaba Cloud’s general manager for the Middle East, Turkey, and Africa region, stated in a press release.

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“By having scalable, highly efficient, and secure infrastructure, we are in a strong position to facilitate the growth of the Web3 ecosystem to better serve the needs of our customers.”