Is Elon Musk's Twitter Takeover Good for Crypto?
KEY POINTS
- Han Kao, founder of Sanctor Capital, says Musk's Twitter takeover is net positive for crypto and Web 3.
- Kao believes Musk will either drive Twitter toward decentralization and Web 3 adoption, or the controversial figure will make bad decisions that highlight the flaws in centralized platforms.
Han Kao, founder of Sanctor Capital, says the move will be “net positive” for crypto.
The dust is starting to settle after Elon Musk's successful $44 billion Twitter takeover. A known crypto enthusiast, the man behind Tesla and SpaceX frequently provokes mixed reactions in the crypto world and beyond. His deal to buy Twitter is no different.
We spoke to industry insider Han Kao, founder of Sanctor Capital and founder of Crypto Briefing, to find out more.
Han Kao: Even if he makes "awful" decisions, it will be net positive for crypto
In Kao's view, a Musk-led Twitter will ultimately be positive for crypto and Web 3. "I think in the long term the net result will have a net positive impact on the Web 3 space," he said. "But what will be interesting is what happens in the short and medium term."
Kao explained his thinking, saying Musk will either make a lot of positive improvements that stimulate the growth of Web 3, or he'll push people to seek alternative platforms. Web 3 is best described as the next generation of the internet. One key aspect is that it gives individuals -- not big companies -- control of their data.
In the first scenario, Kao says Musk could "move the platform towards decentralization of social media and adoption of web3.0 technologies and ideologies." According to Kao, this will happen if Musk truly believes in blockchain and decentralization on an ideological level and brings on "smart, ethos-driven leaders" to help seek positive change.
The alternative? "He will make awful impulsive decisions and changes and it will catalyze users in the social media space to seek alternative platforms that align with their web3 values," says Kao. "So either scenario brings things to a head, thus net positive."
Could Musk turn Twitter anti-Bitcoin?
In the past, Musk has been optimistic about Bitcoin and crypto. But his dogged devotion to his pet crypto, Dogecoin (DOGE), makes some observers wonder how seriously he takes the industry. Musk's constant tweets are a major reason DOGE continues to sit in the top 20 cryptos by market cap.
The reason for Musk's support? Dogecoin's success would be ironic. During a discussion on audio-based social media app Clubhouse last year, he pointed out that fate loves irony. "What would be the most ironic outcome? The currency that started as a joke in fact becomes the real currency," he said.
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Many credit Tesla's decision to accept Bitcoin (BTC) as a form of payment as a major driver in crypto's huge rally last March. However, the electric car producer's U-turn later in the year acted as a catalyst for a subsequent price slump. Tesla paused Bitcoin payments due to environmental concerns around the same time as China adopted harsh anti-crypto measures.
When asked whether Musk might somehow turn Twitter anti-Bitcoin, Kao was doubtful. "I don’t think he nor Twitter has the ability to do that," he said. "First, Twitter as a technology doesn’t have any tools that utilize Bitcoin that he can turn off to begin with. In the end you can’t turn anti-Bitcoin without turning anti crypto. If it does go there, then that only accelerates the catalyst even further."
It's all about how we ingest information
Kao takes a big picture view on how Musk might impact the crypto industry. It isn't about crypto prices, it's about the control and dissemination of information. Proponents of Web 3 point to the flaws in the way centralized platforms govern what we read or access. This applies to social media, search engines, and online marketplaces.
"The way we ingest information determines how we view the world but now one man in a private company will control how millions of people ingest information. And this information impacts how we perceive reality," says Kao. "While it's of course possible he could potentially begin influencing the algorithms to affect what information people see about crypto, but this will come to surface sooner than later."
Decentralized social media platforms take the middleman out of the equation. Ultimately, Kao thinks Musk could be a catalyst for a move toward Web 3 and spark changes in how we interact online. He'll either do that by driving Twitter away from a centralized model, or by making decisions that show users why centralized platforms need to change.
"Just like it took a global pandemic for people to understand the meaning of sound money and the benefits of crypto, some heavy handed mistakes by Musk will quickly bring to light many of the problems of centralized social media platforms," finishes Kao.
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