It seems the situation between Zuckerberg and Musk is getting a bit deeper. The two are not only on path to square off in a fight in the ring, they appear on the way to seeing each other in court.
After the release of Meta Threads, Musk and his attorneys sent a cease and desist letter. Since this will be ignored by the Meta people, we can presume lawsuits will ensue.
At the core, from what we know, is the belief that Meta basically took Twitter's code. There were a number of ex-Twitter developers hired by Meta, bringing the code with them. If true, this is in violation of the intellectual property rights of Twitter.
Regardless of the realities of this situation, it does show the transformation taking place. We are looking at the moat with social media that was present for so long being eradicated. The trend towards each platform offering more is clear.
However, that is not the only moat that is likely in trouble. The water surrounding the banking and financial system is going to be under attack. What is at the core of this: the digital wallet.
This is the game changer.
Banks Are No Longer Unique
There was a time where a bank offered something few others could. It was a safe.
Back in the era when we dealt in physical currency, keeping it safeguarded was vital. Here is where banks first made their mark. This carried into the electronic period where networks started to become important.
Today, there is nothing unique about a bank account. If you think about it, we have no distinction between saving at a bank or a PayPal wallet outside being treated differently by the regulations.
What do most people use a bank for? It is to send, store, and receive money. That is the use case in 90% of the instances.
A digital wallet solves that purpose. It also allows for payments in a much easier (and less costly fashion). This is ideally suited for the digital world.
Apple Showed The Power
Apple made a lot of headlines with the opening of its savings program. People were able to use Apple similar to a money market account. This showed how technology and finance are one. This makes sense since most of the latter is residing in the digital realm.
If Apple could rake in over a billion dollars in a few days, what is the capability of Twitter and Facebook? While these two appeared gunning for each other, could we see a day when they target the financial sector? Elon Musk already has his sights set on that.
Becoming the largest financial institution in the world might seem strange for a social media company. That said, when you think about it, this is not far-fetched.
At its core, a social media corporation is nothing but a technology firm. The same is true for finance these days. How many people do any in person interaction with financial institutions. For the most part, it is all done online.
Web 2 versus Web 3
While the world awaits the battles of the billionaires, the true contest could be generational. By this we are not referring to age but, rather, generation of the Internet.
Web 2.0 versus Web 3.0 might shape up to be the biggest fight there is. At the center of this, in my view, is the battle for freedom versus tyranny. Musk, Zuck, or Jamie Dimon? Just different tyrants in control of people's accounts.
If we are going to see a merging of social media and finance, the question will be which is better for users? Of course, most will not be able to decide since they are oblivious to what is taking place. However, there are enough people who are early adopters and trailblazers who see what is going on.
They are also helping to design it.
In the end, Web 2.0 still has to operate within the confines of the established system. For example, to do payments, Twitter is having to file for licenses in different jurisdictions. This is not the case with Web 3.0. If you want to do payments, simply tie into a digital wallet.
Of course, this could be standard when an application is tied to a blockchain since there are a number of ones developed for each. Anyone with a wallet can instantly remit payments regardless of permitting or jurisdiction.
This is the advantage that blockchain based systems have. They do not require buildout of the finance, at least the basics. It is already there natively.
We do not see the same with technology companies. Of course, we also do not see the banks getting into social media. This is likely a mistake since it is evident this is the feeder system. While they will advertise to try and attract people, how will that work when the platforms are offering financial services themselves?
This will also likely lead to litigation and governments stepping in with anti-trust actions. Again, Web 3.0 has no concerns here. This is where decentralization provides coverage. Since much of the basic infrastructure is open source, including many of the wallets, we can see how shutting it down is impossible.
Decentralized Finance (DeFi) is only going to get larger in coming years. How do governments deal with that type of basis? The answer is it cannot. At the same time, how do the traditional financial firms, or TradFi, compete against the FinTech revolution? I believe the answer is the same.
It is going to be a fun ride. There will be a lot of disruption in these two industries.
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