Elon Musk, the owner of the erstwhile Twitter platform now simply known as X, has made no secret of the fact he sees X as much more than a social media platform. Indeed, the acquisition of Twitter last year is widely regarded as Musk’s attempt to fulfill a long-held ambition to create an “Everything App”. The idea of an Everything App is not Musk’s alone: Facebook dabbled with the idea, including its own currency, before abandoning much of the project; In Asia, WeChat is as close as possible to what we would term an Everything App.
However, Musk’s goals are broader and much more far-reaching. Most notably, there is Musk’s stated goal of Twitter/X becoming a financial hub. He even went as far as suggesting it could cover half of the world’s financial system.
<blockquote class= “twitter-tweet”><p lang= “en” dir= “ltr”>Elon Musk says if done right, X would become half of the global financial system. <a href=”https://t.co/HoslcIxRiP”>pic.twitter.com/HoslcIxRiP</a></p>— Watcher.Guru (@WatcherGuru) <a href=”https://twitter.com/WatcherGuru/status/1683324036950966273?ref_src=twsrc%5Etfw”>July 24, 2023</a></blockquote> <script async src=”https://platform.twitter.com/widgets.js” charset=”utf-8″></script>
The idea that X could encompass trillions and trillions of dollars of trade seems preposterous, although that, in itself, does not mean it will be a success. Yet, there are more structural barriers to the creation of the Everything App that should be addressed. Most notably, there is a prevailing idea in tech that users prefer one tool or service that does something very well, rather than a multi-faceted one that only carries out tasks adequately (or poorly). For example, it’s for that reason that businesses might use Slack, Zoom, Superhuman (email), Zapier, Calendly, Beamer, and a host of other tools that can be performed only sufficiently by Gmail/Google Workspace.
There are no barriers to online trading and investing
But returning to the idea of finance and trading. X users and Musk’s (very vocal) supporters were celebrating in late August as it was announced that X had gained some of the licensing requirements for crypto payments and trading. There is a long road ahead before any serious integration of crypto wallets, etc., can begin. Yet, there is also a fallacy in how the news was greeted.
To hear it told, the integration would mean the instant onboarding of X’s 400 million+ users into the world of crypto trading and Web3. Yes, it’s true that the integration with crypto could expose more people to trading and familiarisation with the idea of crypto. But floating the idea that there are millions of people who wish to trade crypto but are reluctant to do so because it is not offered by X is a fantasy.
The last point is an important one. Today, people can buy crypto, as well as stocks and other commodities, on apps like PayPal and Revolut, which also have ambitions of being Everything Apps. It’s easy to do so, but they have failed to make an impact and remain niche players in the overall market. Why? Well, for a start, they aren’t specialist trading apps.
The options for trading are non-existent or limited. Why, for example, buy Ethereum on PayPal when you’ll experience high fees, and a complete inflexibility when it sits in your PayPal account? You can’t trade it, send it anywhere, swap it, or stake it.
Traders prefer trusted platforms with expert tools
The point we made about PayPal will be true for X, at least in the short to medium term. Will expert traders start trading stocks, crypto, etc., on X? Or will they continue to use the best online trading tools like MT4 and MT5? The answer is clearly the latter.
It harks back to what we said broadly about tech users preferring to have one service, tool, or platform that performs specialist functions and does them exceptionally well. Trading and investing is a business of fine margins, and those who succeed use cutting-edge tools and services. The idea of X somehow supplanting the expert trading platforms seems somewhat far-fetched.
Indeed, the idea of X as a trading platform for the ages tends to touch upon another oft-quoted adage in the tech space: It solves a problem that does not exist. As we said, there aren’t millions of people with vast cash reserves refusing to trade and invest until Elon Musk makes it possible on a social media app.
Trading and investment platforms are available in abundance, and they have a low barrier to entry. Moreover, traders trust them because they are fully regulated, as well as offering the advanced trading tools they need to succeed. Trust in the platform is paramount in trading, and investors look for options with proven track records of honoring that trust.
X may encounter regulatory issues
If one looks at Twitter/X, the ten months of Elon Musk’s tenure have been characterized by bugs and other platform issues. More importantly, the platform has been subject to the seemingly rash whims of its owner. You may recall when Musk suddenly announced rate limits in July, putting a threshold on the maximum number of posts users could see per day.
There is also the danger of regulatory control. Consider a scenario where Musk uses X as a finance platform and simultaneously promotes his favorite cryptocurrency, Dogecoin, which he reportedly holds in abundance. Regulators would have a field day with the conflict of interest. The point, as such, is that none of these dangers are present on a specialist trading platform. They aren’t subject to the mood swings of a controversial owner.
Photo via https://twitter.com/TheCryptoLark/status/1696644422199288297/photo/1
Perhaps readers may feel we have been too harsh on X and Musk here. However, that’s not our intention. Indeed, the point of this exercise is not to dismiss X’s chances of becoming a hub for some form of retail trading. Musk did not become the world’s richest person by accident, and his critics are much too quick to dismiss his business acumen. But it will need to become so much more than what has been mooted to succeed. But it all boils down to one salient point: X as a financial Everything App is what Musk and his supporters want; it’s not what the trading world is asking for or, for that matter, needs.
Photo via https://twitter.com/sumitkapoor16/status/1696517720148509070/photo/1
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