Musk officially announced that X Money is about to launch! The "super app" challenges the position of Alipay.

On November 14, Musk announced in a post that X Money is about to launch, marking the next phase of his plan to transform X into a “super app.” This move comes after X undertook a comprehensive reform of its messaging system, which integrates encryption chat, audio and video calls, and file sharing into a new platform called XChat. X Money uses Bitcoin-style encryption technology to provide end-to-end encryption protection.

X Money and XChat dual-engine driven super application strategy

(Source: X)

Musk posted on X, stating: “X has just launched a whole new suite of communication solutions, including encryption messaging, audio/video calls, and file transfers. X Money will also be launched soon.” This brief announcement reveals Musk's grand vision for the X platform, transforming it from a mere social media platform into an integrated super app encompassing communication, payment, social, and AI services.

According to the company, XChat is the most significant messaging feature upgrade in the platform's history. The new interface integrates standard private messaging and fully encrypted chat into one inbox, eliminating the need for a scattered menu and separate “encryption” tabs. Encrypted chat now supports end-to-end encryption, covering messages, media, file sharing, as well as audio and video calls. Musk described the system as “Bitcoin-style encryption,” designed to provide privacy protection without compromising functionality. Earlier messages will be marked as unencrypted, and users can enable encryption by setting a PIN.

Like X Money, XChat also represents an important step towards realizing Musk's vision of a universal communication center. Since Musk took over in 2022, X's business has far surpassed its origins as a microblog. Among the most notable changes is the integration of Grok AI, allowing users to perform artificial intelligence queries. Today, the comprehensive upgrade of communication functions and the upcoming launch of financial services make X's ecosystem increasingly complete.

X Money and XChat Integration Features

End-to-end encryption message: Using “Bitcoin-style encryption” to protect privacy

Encryption audio/video call: Complete communication functionality encryption protection

Secure File Transfer: Encrypted sharing of large files

P2P Payment: Upcoming peer-to-peer transfer feature

Digital Wallet: Financial service in collaboration with Visa

The core logic of this integration strategy is to reduce the friction for users switching between different applications. Consumers want the number of applications they use daily to decrease, not increase, which is already a well-known saying. Musk is precisely targeting this pain point, trying to provide a one-stop service on the X platform.

X Money's ambition in financial services and regulatory challenges

Musk has long stated that X's goal is to become a “super app”, a value-added service that can meet many of the daily needs of users. This is expected to include financial services. Reports indicate that X has been seeking approvals across the United States to launch a funds management business. While it is currently unclear which fintech service will be approved first, it is likely to be payment and transfer services.

Earlier this year, X partnered with Visa to launch a digital wallet and peer-to-peer payment service, which is planned to go live in January 2025. This collaboration provides X Money with access to traditional financial systems. Visa's global payment network covers billions of users and millions of merchants, and this partnership allows X Money to have a wide range of use cases from the start. Users can make online purchases, transfer money to friends, and even spend at physical stores through X Money.

In terms of financial services, the world does not need banks; we only need banking services. This is Musk's challenge to the traditional financial system. He believes that banks, as intermediaries, increase costs and complexity, while technology companies can provide more efficient and cheaper financial services through software and algorithms. This concept of “de-banking” is similar to the “decentralized finance” (DeFi) of encryption.

Looking ahead, we can expect Company X to provide a full range of financial services. In addition to basic payment and transfer services, X Money may also offer savings accounts, microloans, investment management, and even insurance and credit scoring services. Musk has revealed that he hopes X Money can handle users' “entire financial lives,” from daily spending to retirement savings.

However, the regulatory complexity of financial services far exceeds that of social media. Company X needs to obtain a Money Transmitter License in each state in the United States, which is a lengthy and costly process. In addition, anti-money laundering (AML) and know your customer (KYC) compliance requirements also pose challenges to the user experience of X Money. Finding a balance between protecting privacy and meeting regulatory requirements will be key to the success of X Money.

“Bitcoin-style encryption” and privacy protection commitment

Musk described the encryption technology of XChat as “Bitcoin-style encryption,” a choice of words that carries profound meaning. The cryptographic foundation of Bitcoin is public key encryption and the Elliptic Curve Digital Signature Algorithm (ECDSA), which provide extremely high security and tamper resistance. By borrowing the term “Bitcoin,” Musk is both paying tribute to the encryption community and assuring the reliability of the technology.

End-to-end encryption means that only the two parties in communication can decrypt the message content, and even the X platform itself cannot read it. This level of privacy protection is comparable to mainstream encrypted communication applications like Signal and WhatsApp. For users who value privacy, this is a significant enhancement to the appeal of the X platform. In the past, many users were concerned that the X platform would monitor or leak private message content, but the introduction of end-to-end encryption has alleviated this concern.

Earlier messages will be marked as unencrypted, which is a practical design. Fully transitioning to an encryption system takes time, and X chooses to proceed incrementally, allowing users to gradually adapt to the new features. Users can enable encryption by setting a PIN code, and this opt-in mechanism balances privacy needs with user convenience.

The addition of the encryption file transfer feature further expands the utility of XChat. Users can securely share files, photos, and videos without worrying about interception by third parties. This is especially important for business users, as they often need to transmit sensitive contracts, financial statements, or proprietary information.

Feasibility and Risks of Challenging the Alipay Model

The “universal application” aimed at unification is Musk's ultimate vision for X. Earlier this year, X partnered with Visa to launch a digital wallet and peer-to-peer payment services, scheduled to go live in January 2025. The addition of encryption communication and integrated calling features brings X closer to Musk's long-standing goal of creating a universal communication and financial platform—similar to Asian “super apps” like Alipay.

Alipay's success in China provides a reference blueprint for X Money. Alipay started as an instant messaging tool and gradually integrated dozens of services such as payment, e-commerce, ride-hailing, food delivery, and wealth management, eventually becoming an indispensable platform in the daily lives of Chinese users.

However, X faces unique challenges in replicating the Alipay model in the U.S. market. First, the application ecosystem in the U.S. is more fragmented, with users accustomed to using specialized applications (PayPal for payments, Zoom for video calls, Dropbox for file sharing). Convincing them to abandon these mature tools in favor of X's integrated service requires offering significantly better experiences or cost advantages.

Secondly, the financial regulatory environment in the United States is much more complex than that of China. X Money needs to obtain independent money transfer licenses in each state, which is a long and costly process. PayPal and Square took years to complete the licensing applications for all 50 states. Although X Money has the endorsement of Visa, regulatory approval may still become a bottleneck in the speed of advancement.

It will be interesting to see what Musk has prepared for X Money. Never underestimate someone who has plans for living on Mars, developing household robots, and self-driving cars. Musk's Tesla, SpaceX, and Neuralink were all once considered impossible projects, but they ultimately made groundbreaking progress. Whether X Money can replicate this kind of success will be revealed in 2025.

xAI funding rumors and Musk's denial

It is worth noting that on the same day that X Money announced, Musk refuted a CNBC report which stated that his company xAI had raised $15 billion in funding. Musk called the report “false.” CNBC had previously cited anonymous sources claiming that xAI added $5 billion on top of the $10 billion round it reported two months ago.

This interlude shows Musk's emphasis on the accuracy of information, and also suggests that the actual financing progress of xAI may diverge from market rumors. xAI is an artificial intelligence company established by Musk in 2023, which has been integrated into the X platform to provide users with Grok AI query services. If xAI has indeed raised $15 billion as rumored, it would make it one of the highest-valued AI startups, providing ample funding support for new ventures such as X Money.

On Stocktwits, retail investors' views on X Corp (a private company) show a “bearish” trend. This sentiment divergence indicates that despite Musk's continuous introduction of new features and businesses, the market still has doubts about X's commercialization prospects. The success or failure of X Money will largely determine whether this skepticism can be overcome.