Musk wants to financialize X, can Web3 help make it happen?

Author: Weilin

Editor: Wendao

Elon Musk, chairman of Company X (formerly Twitter), mentioned WeChat again at an all-hands meeting held on October 26. He reiterated his desire to build a super app with multiple functions in one. At this time, it is exactly one year since he officially acquired Twitter.

Musk highlighted that Twitter will launch its latest payment feature, saying that it will allow people to “not need a bank account” and that related financial services will be launched by the end of 2024.

Although Musk has outlined a blueprint for Twitter to “copy WeChat” and “super WeChat”, Twitter still faces many challenges if it wants to transform into a super app comparable to WeChat.

As a content-sharing platform, Twitter’s DNA is different from that of social messaging apps that are embedded in payment methods, and it lacks high-frequency payment scenarios such as e-commerce.

The obvious difference from other social platforms is that Twitter, as a global social platform, has a wide range of crypto asset users, condenses Web3 culture, and Musk himself is a Dogecoin enthusiast. Twitter has the potential to become a cross-border payment tool if it embeds Web3 payment methods that reduce transaction friction.

Twitter’s missing payment scenario

"We’re rapidly transitioning the old Twitter 1.0 into an ‘all-in-one’ app… People can make payments, send messages, watch videos, make phone calls, and do whatever they like, all conveniently in one place. At the all-hands meeting of X (formerly Twitter), Musk once again reiterated his high hopes for X.

This “all-in-one” app concept is not unfamiliar to domestic users. WeChat and Alipay are representatives of such super applications, especially WeChat, which provides a one-stop solution to a variety of scenarios related to life and work, such as communication, payment, and entertainment, which is beyond the reach of foreign Internet companies.

At this meeting, Musk also praised WeChat again. "In China, they’ve implemented this concept to a certain extent, and that’s WeChat… But that doesn’t mean we just want to copy WeChat. We can actually create products that ultimately surpass WeChat. We can do something incredible. ”

When it comes to the payment scenario, Musk even said that he wants X to replace the bank account, "I mean the entire financial life of the individual. If money is involved, it will be on our platform - whether it is money or securities or something else. It’s not just about transferring $20 to a friend. I mean, you won’t need a bank account anymore. He revealed that X will launch the relevant service by the end of next year.

In fact, foreign tech giants including Meta, Uber, and Snapchat have all wanted to make super apps, but in the end they have not been able to sustain themselves.

In 2020, Snapchat and Square partnered to release Snapcash to provide users with mobile payment services. Later, Snapchat allowed third-party access and provided the Minis feature, which allowed users to play games and other activities within the app.

Meta’s predecessor, Facebook, introduced a payment function in its messaging app Messenger, and added an e-commerce function to Instagram, a photo and video sharing platform, to create more payment scenarios.

Facebook has also tried to turn WhatsApp into a super app in some markets, such as India.

But for users in the United States, it has become a habit to use different apps to complete different services. Therefore, it is not easy to do what WeChat can do in overseas markets.

Some industry analysts point out that successful payment wallets are often built on core high-frequency payment scenarios. WeChat has built its own payment base through peer-to-peer transactions, allowing users to send money to their contacts directly through the app. Alipay relies on Alibaba’s Taobao, Tmall and other e-commerce platforms to form a payment ecosystem that is widely accepted by merchants and consumers.

Both platforms also focus on the development of offline face-to-face payments. At the time when WeChat and Alipay began to prevail, Western payment solutions such as Google Pay and Apple Pay had not yet been launched in China.

In contrast, Twitter faces the problem of a lack of scenes. Despite Musk’s ambitions, Twitter will face many challenges in the payment field if there are no e-commerce, live streaming and other scenarios, and mature online payment solutions in different countries.

Musk had to create a core payment scenario for Twitter within the app. Now it seems that Twitter wants to try to achieve this through the X BLue paid subscription (formerly Twitter Blue), which allows users to pay for exclusive content, and creators receive dividends through an advertising revenue sharing model.

The problem is that these paid features have been used relatively low to date. Only about 640,000 people reportedly signed up for the Blue service in the first half of the year, and the current churn rate is extremely high, with more than half of early Blue subscribers canceling their subscriptions.

Whether it will be possible to convince a large number of X Blue users to start using social media apps to expand their payment tools is a huge question.

In addition, in Western markets, users have become accustomed to finding the services they need in Apple’s and Google’s app stores, and this service system has become so deeply rooted that it is extremely difficult to change.

Can Web3 be a breakthrough?

However, when discussing innovation in the payments space, it is not to be overlooked that Twitter has a clear advantage in cryptocurrency culture and Web3.

Under the leadership of former CEO Jack Dorsey, Twitter has actually made good progress in the Web3 space. The launch of Twitter Space and NFT products are both manifestations of this trend. These efforts may have been one of the important factors in Musk’s acquisition of Twitter, which is clearly more forward-looking than Google, Amazon, Meta’s exploration in the NFT and cryptocurrency space.

After Musk took over, Twitter changed its name to X, and interestingly, X.com was the predecessor of the payments giant PayPal. This is not a coincidence. In 1999, Musk invested $12 million to co-found X.com with former Intuit CEO Bill Harris, and later PayPal has made great achievements in Web3, and not long ago, it released the dollar stablecoin PYUSD.

This year, Twitter’s pace in financial fields such as payments has significantly accelerated.

At the end of August, X received a cryptocurrency payment license from the US state of Rhode Island. This means that it can provide storage, payment and trading services for some users. Prior to that, Twitter had already obtained fiat payment licenses in six US states.

On April 13, X also launched the Cashtags feature, which allows users to view stock quotes directly on the platform, with data provided by TradingView.

At the same time, Twitter has also partnered with online broker eToro. eToro is an investment trading platform known for its auto-copying, which means that investors can track and copy the trades of the top traders on the platform, including stocks, funds, and 14 cryptocurrencies such as Bitcoin and Ethereum.

From a more macro perspective, X’s active performance in the cryptocurrency and Web3 fields is not unrelated to Musk’s own understanding of this field, which may be a breakthrough for X to transform into a super app.

And according to an investor document obtained by The New York Times, Musk predicts that X will earn $1.2 billion from the payments sector by 2028, in which he also shows his determination to reduce his reliance on advertisers.

Some optimistic analysts believe that Musk’s plan for X can be seen as a rebirth of Libra. Libra, which once provided crypto wallets to Facebook’s more than 1 billion users, once planned to issue a stablecoin that would pass the world, but the plan failed under severe scrutiny from the US Congress, “but Twitter can learn that Musk does not have the same political baggage as Mark Zuckerberg.” ”