December 5, 2022
The Possible Meaning Of Musk's Twitter Purchase For The Adoption Of Cryptocurrencies On Social Media

The Possible Meaning Of Musk's Twitter Purchase For The Adoption Of Cryptocurrencies On Social Media

The development of Web3 technologies has forced Web2-based businesses to reevaluate their current goods and services. Nonfungible tokens (NFTs), one of the Web3 technologies, are used by many well-known brands to promote their products and demonstrate their support for cutting-edge technology.

Another area where Web3 has the most influence is social media. Facebook changed its name to Meta and its entire mission from being a social media site to being the future entry point to the metaverse. Instagram, owned by Meta, announced that NFT minting and trading services would be added. With 3 million wallet users, Reddit—another well-known social media site—became a hub for NFT trading.

In addition to NFTs, major social media platforms like Twitter and Reddit allow users to tip content creators using cryptocurrencies. The majority of social media platforms, however, do not already integrate cryptocurrency.

With Elon Musk’s recent $44 billion acquisition, many believed that Twitter was developing its own cryptocurrency wallet and might do so soon. But according to recent reports, Musk temporarily shelved his plans for a cryptocurrency wallet.

Market analysts are optimistic that more Web3-focused services will appear on the social media platform despite the current setback in integrating the cryptocurrency wallet.

Since Twitter already allows for cryptocurrency tipping, adding support for cryptocurrency wallets is the next logical step, according to Martin Hiesboeck, head of blockchain and cryptocurrency research at cryptocurrency trading platform Uphold.

“Many in the crypto space are bracing themselves for how Elon Musk will impact the industry, and the response has been surprisingly optimistic. Its clear Musk will drive the digital asset integration with the platform along. For instance, many platforms will offer their crypto wallets to keep transactions close to their ecosystem. Twitter doing this is a logical step for a social network that already enables users to send tips in crypto,” Hiesboeck said. 

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Not only did the controversy surrounding Musk’s purchase of Twitter make headlines, but Musk also took the social media platform private almost 13 years after it first went public. Now that Twitter is privately held, Musk has more influence over strategic decisions, enabling him to push for more cryptocurrency and Web3-related services on the platform.

A sizable portion of Web2 platforms has integrated Web3 support over the past 18 months, according to Jack Jia, head of rates at fintech company Unlimint. Jia hopes that with Musk in charge, Twitter will follow suit.

“You can connect noncustodial wallets like MetaMask to your Instagram or Twitter and display your NFT as a profile picture. Google launched a fully managed Ethereum node service, like Infura and Alchemy. Then Coinbase and Revolut look more similar today than different in terms of crypto features and functionality. So, Musk’s Twitter will have a great impact on crypto, probably by launching something similar to Aave’s Lens Protocol, decentralizing Twitter to make it more censorship-resistant,” Jia said. 

Social media platforms can help onboard billions of people to Web3 practically overnight. Web3 onboarding is still slow and needs to be made simpler and faster. The success of the Reddit NFTs served as proof of this.

Web3 is not an independent internet ecosystem but rather a transition, according to Max Kordek, CEO of blockchain infrastructure platform Lisk, and these platforms are best suited for onboarding.

“I think what people often misunderstand is that Web3 is not a whole new internet. Inside Web3, we also find Web2, the same way we found the former World Wide Web within Web2. In the case of social media integrating crypto, we are talking about a merge of Web2 and Web3. A social media platform is just a distribution channel; Web3 doesn’t make them irrelevant. They will be ever more important in a more connected future,” Kordek said.

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In the Web2 ecosystem, social media platforms evolved from being a way to connect with people around the world to becoming an essential component of the internet. But over time, these social media sites also developed into a centralized repository for millions of users’ data, on which major brands and corporations rely to market their goods.

Several social media platforms have engaged in malpractice due to their reliance on advertisers. User’s private information was discovered to be sold by these platforms to advertisers, and lax security measures have also caused data breaches and privacy rights violations.

Because of this, decentralized publishing protocol Koii Network co-founder and director of design Kayla Kroot thinks the long-term effects of these social media companies’ cryptocurrency ambitions could be detrimental to the sector.

While the integration of cryptocurrency into any major mainstream technology platform may be seen as a positive step for adoption, the deeply ingrained capitalistic tendencies of social media companies indicate that it would harm the industry in the long run, according to Kroot, who used the example of the recent controversy surrounding Musk’s plans to introduce an $8 per month fee for the infamous “blue tick.” These integrations can potentially turn away millions of users if handled improperly. Twitter’s controversial decision to start charging verified members $8+ per month for Twitter Blue is a recent illustration of this.

A move to integrate cryptocurrency “into networks that actively violate the core beliefs of the community will be seen by crypto natives for what it is: a cash grab,” she added, noting the growing awareness surrounding data autonomy and user privacy, two topics particularly valued within the blockchain community. The general public’s perception of cryptocurrency could be significantly worse, harming it entirely.

One company struggling to make the switch from its Web2-based roots to a fully decentralized Web3 ecosystem is Meta. Crypto integrations that are motivated by money and don’t reflect the values of the crypto community will not only turn off users who are already familiar with the technology but also might fuel anti-crypto sentiment.

Although the larger social media platforms are still very centralized and vigorously utilize their users’ content for traffic and revenue, blockchain technology, at its basic, encourages distributed governance and ownership for users.

The most well-known creators on traditional social media platforms are currently what gives those platforms their traction. Still, the platforms profit from that traction through ad revenue, not the creators. Thus, rather than truly embracing the principles of the developing technology, the majority of these crypto integrations appear to capitalize on the trend.

Twitter’s Web3 ambitions, according to Tom McArdle, chief operating officer of decentralized messaging platform Satellite. im is a “classic wolf-in-sheep’s-clothing moment for Web3.”

After the acquisition, cryptocurrency will likely be incorporated into the Twitter platform. The Web3 movement has not advanced by adding Bitcoin or Dogecoin payment support to an existing Web2 technology stack. Since Musk has leveraged up the company to pursue the acquisition and now needs $1 billion a year to cover interest expenses, he said, Twitter will continue to operate in a centralized manner and will more aggressively monetize platform users.

“The integration of crypto payments is just another revenue stream and has nothing to do with the social and ethical priorities that come with the Web3 frontier — transparency, user privacy, and data ownership,” he said. 

Alternatively, it has been praised as a step toward wider adoption that Web2 social media platforms are becoming more interested in integrating Web3 technologies. Web3 experts, on the other hand, contend that social media platforms are only betting on the fad and not the Web3 way of life, which may ultimately discourage true crypto adoption. They use Meta’s recent failure to rebrand as a Web3 brand as an example.

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