What Does Elon Musk’s Twitter Acquisition Mean for Crypto? Can Twitter Become The Bridge Between Web2 and Web3? (#97 - 3 May 2022)

Dear Friends,?

Last week’s announcement of Elon Musk buying Twitter may indicate big changes are in store for the social media platform.?

But what does this development mean for the broader crypto and Web3 ecosystem? I cover it all in my weekly newsletter below.

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What Does Elon Musk’s Twitter Acquisition Mean for Crypto? And Can Twitter Become The Bridge Between Web2 and Web3?

Twitter announced last week that it had entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk in a transaction valued at approximately $44 billion.

Many outside the crypto community are often shocked to learn the outsized role that Twitter plays in the crypto ecosystem.

“Crypto Twitter,” after all, is arguably one of the most important sources of news for any crypto trader or aficionado.?

However, Twitter has had numerous challenges over the years, which include:?

Slow in rolling out new features - Twitter has done a poor job in launching new features that users actually want. For example, there is still no edit button for tweets. This is an issue that Elon Musk has raised numerous times in the past.

Fake accounts and bots - Twitter has become notorious for a large number of fake accounts and bots that plague the platform.

There are numerous Twitter bot farms around the world that allow any bad actor to launch campaigns.

This was visible not only in recent U.S. elections but even in recent military conflicts.

This is something Elon Musk has vowed to address when he mentioned that Twitter should authenticate every human user.

Opacity - The way Twitter operates is incredibly opaque ; how its algorithms operate has long been kept a secret. And the decision-making process has been shrouded in mystery, as well.

Although Twitter launched a blue checkmark feature for verified users, the process of how those users are verified is non-transparent and arbitrary, often depending on personal contacts that individuals have at Twitter.

Many of the biggest personalities on Crypto Twitter have yet to see their accounts verified despite having hundreds of thousands of followers.?Ryan Selkis with his 250,000+ followers is a good example.

Even I was turned down by Twitter numerous times despite having fraudsters impersonate me each week whilst attempting to scam my followers out of money.

I have never been able to get any answers from Twitter’s support team despite my best efforts.

Not surprisingly Elon Musk has vowed to change this by providing more transparency to the process.?

Censorship - This has become a huge issue, especially in the wake of former U.S. President Donald Trump being banned from the platform.?

Despite one’s political views, banning a U.S. president is no small matter, especially when you consider that groups like the Taliban or other governments with incredibly poor human rights records still have their accounts.

Now, what should we expect moving forward?

Generally, this is a positive move for crypto. Elon Musk understands the space and is well aware of the role that Twitter plays not only in the crypto ecosystem but in society more broadly.?

A couple of changes that I am expecting to see include:

Fixing some of the most immediate problems - These include all the of the aforementioned issues, from lack of transparency to making the algorithm open source.

Adapting to broader social media developments -? Twitter should hopefully begin adapting more quickly to broader trends that users want to see. More video functionality is a good example, especially as the broader social media sphere continues to move away from text toward short-form video content.?

Experiment with new ways of delivering content - Whilst the current 280-character limit is generally accepted, the growing popularity of threads indicates that there is strong demand for longer-form content as well.

Becoming more crypto enabled - Twitter already allows a number of crypto features, from Bitcoin and Ethereum tipping to using NFTs as profile pics. I would expect the rollout of additional crypto features to accelerate.

But when you stop and think about Twitter’s true potential, things quickly become very interesting and makes the improvements mentioned above seem trivial compared to the real role that it can play.

For example, the current Web3 and metaverse communities have a serious problem when it comes to identity verification.

Could Twitter be used as a bridge between Web2 and Web3, allowing users to use the platform as an authentication and identify verification mechanism?

Could I connect my Twitter account, either directly or indirectly via zero knowledge proofs mechanisms for example, to one of my decentralized wallets and allow it to perform some form of authentication as I interact with some of the metaverse platforms?

There is no doubt that KYC and broader AML requirements will come to the various metaverse ecosystems and an efficient and user friendly authentication mechanism (better and more reliable than sending a copy of your passport!) will be needed.

And the opportunity is even more pressing when it comes to DeFi including decentralized exchanges. And considering that most, if not all, DeFi users are also active Twitter users, there is a natural fit.

That may very well be one of the biggest opportunity for the platform moving forward and one that Twitter has a chance of winning if it tries. Other platforms like Meta or Discord will undoubtably try as well but I would argue that Twitter, under a Elon Musk leadership, has a good change of winning.

In the same way that Google made Web2 accessible to the broader public and Facebook took things even further mainstream, Twitter could build such a bridge between these two iterations of the web.?

I would be surprised if Elon hasn’t already thought about this.

I don't know what Twitter will look like over the next one to two years. But I do know that it will certainly look and function better than it does right now.?

Definitely a development and acquisition to follow.

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*Please note that this newsletter reflects Henri’s personal views and not those of any organisation he is involved with. This newsletter is for educational purposes only and none of its content should be construed as investment or financial advice of any kind.?