I haven’t written a lot about the whole Elon buying Twitter debacle, mainly because there wasn’t a Fintech angle. But Bent Gjendem, CEO of Finance Innovation, made me aware
that this is a possibility:
Elon Musk insists the deal is part of a master plan to launch an “everything app” incorporating messaging, payments, and commerce that has been more than two decades in the making according to Financial Times
The idea of Twitter as a Fintech app is an interesting thought exercise. Let’s think through some different scenarios:
Model 1) Twitter tries to go after other fintech companies like Wise by incorporating cross-border payments. Let’s say you have NOK and want to send this to someone in the US who wants dollars. You could then send NOK to Twitter where it is converted to a digital currency for a few milliseconds before it is sent on to the recipient in USD. This could be doable, but I don’t see why people would turn to Twitter for this.
Model 2) Twitter tries to get into the payments business by becoming a payment platform for merchants. But why wouldn’t we just use Facebook/Apple/Google Pay instead? They are much larger and have more customers. Twitter could try to be a niche player in this space, but I don’t see a big market for that.
A side note here: Jack Dorsey, the former CEO of Twitter, ran a payment company, Block (formerly known as Square) at the same time as he ran Twitter. I guess there were good reasons for him to keep these companies separate.
Model 3) Twitter goes into crypto by providing a wallet to every user. You could buy Bitcoin and other cryptos and store them in a Twitter wallet. But why would you do that when you can store them on Coinbase or Binance instead? Twitter would have to offer some sort of incentive to use their wallet, and I don’t immediately see what that should be.
On the other hand, they could use the Reddits playbook
to onboard millions to crypto without them knowing by providing a custody wallet connected to your account. If Twitter gives every user a wallet they would be 4 times larger than Coinbase when it comes to the number of users. This could also be a way to get rid of the bots since Twitter would have to provide a KYC solution for the new wallets.
Elon’s alleged idea is interesting, but the execution is going to be really difficult, and I don’t see how this is going to help Twitter expand its user base. After all, Twitter is very small compared to Facebook, Instagram, and Snapchat. But who knows? After all, Elon Musk comes from the PayPal mafia.