BENGALURU: Elon Musk’s X (formerly Twitter) has announced XChat, a major overhaul of its direct messaging system, now available to some ‘X Premium’ subscribers as a beta testing and set for a wider rollout.
With this move, X continues its transformation from a microblogging platform into a full-fledged digital ecosystem.
The shift is not just about user convenience—it marks an ambitious play to disrupt the mobile communications and fintech landscape, pushing closer toward Musk’s vision of building an “everything app.”
At its core, XChat represents the next battleground in secure, integrated mobile messaging and payments—areas central to the evolution of the mobile ecosystem.
Elon Musk’s announcement of XChat promises to influence the competitive landscape currently dominated by messaging platforms like WhatsApp and Telegram.
What is XChat?
At its simplest, XChat is a redesign of the X direct messaging architecture. Built in Rust, a programming language valued for performance and safety, the new backend aims to improve speed, scalability, and—critically—security.
Key features of XChat include:
• End-to-End Encryption by Default: Messages are now fully encrypted, a long-requested feature that aligns X with privacy-first messaging platforms like Signal and WhatsApp.
• Vanishing Messages: Ephemeral messaging adds another layer of security, echoing popular formats seen in Snapchat and Telegram’s secret chats.
• File Attachments: Users can now send a wide range of documents, videos, and media files directly within messages.
• Audio and Video Calls without a Phone Number: This feature breaks down one of the last barriers in digital communication: the dependency on phone numbers, making XChat a more flexible and private solution for voice and video calls.
These updates put XChat on par with leading messaging platforms in terms of feature set. However, the real innovation may lie in its strategic integration into X’s broader product roadmap.
Bitcoin like? Interpreting the announcement
Musk has described XChat as being “built on Rust with Bitcoin-style encryption.” While technically inaccurate—Bitcoin transactions are not encrypted but rather public by design—the phrase hints at a larger vision: integrating financial services directly into the platform.
Equally, in the past, Musk had positioned X’s direct messaging (DM) as a challenger to encrypted messaging platforms like Signal and iMessage. By calling XChat a service with only “Bitcoin-style encryption” it might a way to hint at structural diversity from true encryption. Time will tell if the comment was embracing encryption or announcing a new security approach.
“The launch of XChat underscores a broader shift in the mobile ecosystem—where messaging, identity, and payments are increasingly converging into single platforms. While innovation at this scale is welcome, it must be matched by transparency, robust security, and user trust. As more platforms aspire to become all-in-one ecosystems, the challenge for the industry will be balancing convenience with accountability and openness,” Dario Betti, CEO, Mobile Ecosystem Forum, said.
A messaging layer for payments?
X has already secured regulatory approvals for payment processing in multiple U.S. states and has partnered with Visa to create “X Money Accounts.” These accounts would allow users to send and receive money, make purchases, and potentially manage their finances entirely within the app.
By turning messaging into a transactional layer, XChat could serve as the core infrastructure for peer-to-peer payments and, eventually, commercial activity. This mirrors how WeChat evolved in China from a messaging app into an indispensable tool for everything from grocery shopping to doctor appointments.
The “everything app” challenge
While the WeChat comparison is compelling, the Western mobile ecosystem operates differently. Attempts by Facebook, Snap, and others to replicate the success of WeChat’s all-in-one model have largely failed. Users in North America and Europe continue to prefer “best-of-breed” apps over centralized platforms.
Yet, Musk’s background with PayPal and his willingness to break platform conventions may offer an edge. X’s aggressive push into payments, content monetization, and now encrypted communication is unlike anything attempted by a major Western social media platform to date.
Firstly, Elon Musk’s entry into the messaging market with XChat will inevitably intensify competition. WhatsApp and Telegram have long benefited from their extensive user bases and robust feature sets, yet they also face ongoing criticism related to privacy concerns, feature limitations, or centralised control.
Moreover, XChat’s development could accelerate innovation across the industry. As a new entrant with ambitious technological goals, XChat may push WhatsApp and Telegram to enhance their offerings, improving user privacy, adding new multimedia capabilities, or incorporating AI-driven features like smart replies and content moderation.
The competitive pressure can lead to a broader evolution of digital communication norms, benefiting users with richer and more secure platforms.
However, the introduction of XChat is not without challenges. Establishing a new messaging platform requires overcoming significant barriers, including building a critical mass of users and ensuring high reliability and ease of use.
WhatsApp’s integration with Facebook’s suite and Telegram’s focus on privacy have already entrenched their market positions. XChat will need to offer compelling reasons for users to switch or adopt an additional platform, balancing innovation with user convenience. Furthermore, the fragmented user attention across multiple messaging services could pose challenges in achieving wide adoption.
Trust, privacy and regulation
The success of XChat will depend not just on features but on trust.
As of mid-2024, X’s previous encrypted messaging rollout was limited and not enabled by default. Musk has acknowledged these missteps, calling earlier versions “clunky.”
The shift to encryption by default marks a serious course correction—but one that will be closely watched by regulators and privacy advocates alike.
Furthermore, XChat’s features could raise compliance questions under laws like the EU Digital Services Act (DSA), which mandates transparency and user protection in digital platforms, especially around encryption and moderation. And if XChat evolves into a payment channel, it will come under the purview of financial regulators, adding another layer of complexity.
What it means for mobile ecosystem
From a broader industry perspective, XChat is both an opportunity and a challenge. For mobile operators and fintech players, XChat represents a converged communication-financial service offering that could reshape user expectations. For messaging providers, it’s a reminder that encryption, multimedia capabilities, and platform independence are now table stakes.
And for regulators, it raises urgent questions about privacy, platform power, and competition. Whether or not Musk can turn X into a Western-style “everything app,” XChat signals a clear direction: the blurring lines between communication, content, and commerce will continue to define the next phase of mobile innovation.
Betti said that MEF will continue to monitor the evolution of X and similar platforms, evaluating their impact on mobile messaging, payments, and digital services worldwide.
“As mobile technologies converge and transform, we invite our members and partners to share their insights on what these changes mean for industry stakeholders, users, and regulators alike.”
