Will Twitter Become a Crypto Platform?

It’s a very tough week for crypto prices as well as the stock market – with Tesla (NASDAQ:TSLA) among the biggest losers. Nonetheless, Crypto Twitter is alight with enthusiasm for Elon Musk’s successful, troll-tastic takeover bid for Twitter (NYSE:TWTR).

Twitter (TWTR) logo displayed on a smartphone screen with a hand ready to use the app
Source: shutterstock.com/khak

Why are crypto enthusiasts – normally into decentralizing and democratizing the system – excited for the richest person in the world to take charge of their preferred platform?

Well, besides being the #1 “hype man” for Dogecoin (DOGE-USD) and Bitcoin (BTC-USD)… And friends with Jack Dorsey, who’s a diehard Bitcoiner… Elon’s been making promises like these:

Freedom. Open-source. Community. These are magic words in the New Digital World. It makes people feel like they can stay on Twitter without betraying their Web3 ideals. Have your cake and eat it, too!

But…uh…what will this all look like – in practice?

Here are what I view as possible scenarios for crypto-izing Twitter, in increasing order of likelihood.

3. Twitter Evolves Into Web3 Platform

Twitter has yet to go nearly as far as Coinbase (NASDAQ:COIN) – whose new NFT marketplace resembles a “Web3 Instagram”…

But Twitter has taken baby steps in that direction: tipping in BTC; NFT profile pictures; crypto payments for Twitter creators via Stripe’s new partnership with Polygon (MATIC-USD).

“Many of the best ideas come from watching user behavior on the platform, and then we just productize that,” as product manager Esther Crawford described in Wired earlier this month.

“There are all these blockchain protocols that exist, and we need to figure out how to make them useful and accessible for real people,” adds Tess Rinearson, who came on in November as engineering lead of the new Twitter Crypto unit.

Rinearson has a strong interest in digital identity solutions on the blockchain. She mentioned it five times in the Wired interview – while crypto payment features got only one mention. She even participated in the recent round of fundraising for Context, the new identity startup which I describe here.

But to be truly Web3, Twitter would be not only a marketplace of ideas – but a monetary one, too. Users would trade crypto – most often, a native token – for services or goods on the platform. And by holding some of the crypto, users would share in its success. (Typically with governance rights, as well!)

However, Rinearson was especially cagey about the possibility of a “Twittercoin.”

One likely reason is that, when Big Tech starts talking about launching a crypto, regulators tend to get on them like white on rice. Just look at their reaction to Mark Zuckerberg’s Libra initiative from 2019!

But that’s not the only reason that “Twitter turning Web3” is the least likely outcome here.

Twitter’s past AND present “celebrity in chief” – Dorsey, and now Musk – are both skeptical to the concept of Web3, as I’ve noted before. Most importantly, Dorsey built a Twitter that’s very slow and reticent to change.

Yesterday, a former Twitter software engineer recounted what it was like to work there at a similar moment: 2010.

Twitter’s second CEO, Evan Williams, “was ousted [and] went to Hawaii… Ultimately the havoc from Jack’s return, and his cleaning of house, left me rudderless and frequently with 2 – 3 managers on any given day. The product org had no conviction or direction. Twitter was treated as precious. Changes were dangerous. So I left. The end,” writes Nate Agrin.

Remember that Dorsey and Musk are friends – they’re likely to be in touch throughout this transition – and if Musk feels like moving on to the next thing… He can probably just reinstate Dorsey as CEO again!

This is all speculation, of course. Musk is especially hard to pin down. But one thing we do know about both men is that they’re more likely to simply launch a new project (versus overhaul their last one).

Which brings us to a more likely scenario:

2. Twitter Developers Build the Web3 Future of Social Media

Rinearson’s team isn’t the only one “doing crypto” on Twitter’s dime. There’s also Project Bluesky, originally launched in 2019 with this Jack Dorsey tweet:

“We started with a research-intensive process to learn what can be applied from existing decentralized protocols,” explained Bluesky leadership in a recent blog post.

“Some of the most important objectives we have been evaluating are portability, scale, and trust. Portability allows people to keep their social life intact even if they switch providers. Scale allows people to participate in global discourse. And trust is created by giving people insight into what services are doing with their data.”

Bluesky says what it’s building doesn’t “fall neatly” into the category of blockchain networks… But it is working on a “self-authenticating protocol,” where users can access sites with their own, cryptographic identifier – rather than going through a Web 2.0 database of a Big Tech company!

“Our team has previously built leading decentralized web protocols and blockchain networks, and is working on synthesizing the best of what we’ve seen into something new,” says Bluesky, which calls this blog post a “high-level introduction” to a more detailed report coming “this month.”

The good news for Bluesky is that the group gets Twitter funding – while still operating independently from the company itself, as a separate LLC. I imagine that’ll help with regulatory pressures on Big Tech. And it’s a great opportunity to rise above the current chaos…and keep building!

In any event, here’s what I view as the single likeliest outcome of Musk’s takeover at Twitter:

1. Twitter Gets Crypto On the Balance Sheet

Owning crypto in addition to boring old “fiat” currency is all the rage for tech companies these days. Remember how MicroStrategy (NASDAQ:MSTR) was left for dead as a 1990s relic – then after it bought up BTC for its balance sheet…it staged the comeback of the century? MSTR became one of the hottest stocks of 2020, up 172% that year!

And, of course, other notable companies that hold BTC on the balance sheet include Dorsey’s and Musk’s other “babies”: Tesla and Square, now known as Block (NYSE:SQ)!

Twitter – being Twitter – has been resistant to that type of change. But Musk is likely to clean house. His tweets have been full of venom for everyone from CEO Parag Agrawal to Chief Legal Officer Vijaya Gadde.

It’s always worth noting that Musk says a lot of things…but has the most follow-through with things that are beneficial to its own wealth. And getting cryptos that he owns onto Twitter’s balance sheet would certainly qualify.

Besides buying crypto outright – like MSTR, SQ, and TSLA – companies can also mine it… And SQ and TSLA are also getting involved with bitcoin mining, in their new partnership with Blockstream. Either way, this could help bring in revenues…at least during crypto bull markets. (But hey, drawdowns are temporary, and Twitter has had trouble monetizing throughout its 16-year history!)

As owner of DOGE, BTC, and soon Twitter itself, it’s a no-brainer for Musk to add one or both of these cryptos to the balance sheet, whether by buying or mining.

The good news is that boosting these cryptos don’t only enrich Musk – but all holders. And with Project Bluesky operating largely independently from all the drama within Twitter proper… It’ll be exciting to see what its developers produce, to the benefit of all kinds of crypto projects we may not even have imagined yet!

In the meantime, our crypto analysts here at InvestorPlace are turning up plenty of cool opportunities – flying under the radar…for now.

Charlie Shrem just revealed one of the most urgent “crypto alerts” of his 10+ year career. As he explains here, today, April 27 could be a critical turning point – so it’s a great time to take action on his latest prediction. Go here for full details; they’re free and open to any investor who’s willing to hear him out!

On the date of publication, Ashley Cassell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. To have more news from The New Digital World sent to your inbox, click here to sign up for the newsletter.

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