Table of Contents
The trend towards super-apps, which started with WeChat, has become a major trend; now that AI is in the spotlight, super-apps are the dark horse; mass adoption of Web 3.0 may lie beyond sophisticated super-apps.
For some time, the question of how to achieve ‘mass adoption’ in the NFTs, metaverse and crypto assets encompassed within the Web 3.0 domain has been an issue.
As we enter the year 2023, this is becoming more and more likely.
According to research by Dapprader, between 2021 and 2022, global NFT turnover fell from USD 25.1 billion to USD 24.7 billion. At first glance, NFTs may appear to be an orphan flower that bloomed as a result of the flood of investment money from the global monetary easing following the Corona disaster, but the study also shows that trading volumes have increased significantly.
From 58.6 million transactions in 2021, the volume of NFTs has increased to 101 million transactions in 2022. These figures imply that NFTs are moving from being purchased from a speculative perspective to actually being utilised, and that they are entering a phase in which they are being sought out based on their utility as a value criterion.
In relation to regulations, a large gap is being observed between Japan and other countries. A typical example is the issue of securities for NBA Top Shot in the US.
The SEC considered the NFT to be securities, but no such case has emerged in Japan.
This is evidence that Japan has led the world in tightening crypto-asset regulations. In other words, in Japan, the use of NFTs in compliance with the guidelines is not grey, but permitted.
Wallets are an inseparable part of the process of these next-generation technologies taking root in real life. Whether custodial or not, it is said that the winners of the next era will be those who control the wallet market, and by linking wallets to applications that have already completed basic KYC at the start of use, a structure is created whereby the number of users of a social network or application ≈ the number of holders of their own wallet. This creates a composition of the number of users of SNSs or applications ≈ the number of holders of proprietary wallets.
In the Web 2.0 era, the strong players who have expanded their businesses through SNSs are now making their moves, as they see the next business opportunity here. In other words, 2023 is a year in which there is an extremely high possibility of the emergence of a multi-functional NEXT SNS (super-application).
In this special feature, the reasons why existing SNSs are aiming to become super-apps will be unravelled from the history and future predictions of the birth of super-apps, and the future development and beneficial use of applications will be presented based on this.
The trend towards super-applications for SNS is said to have started with WeChat, provided by the Chinese company Tencent, which, when released in January 2011, was an application that mainly functioned as a messenger.
Later, in August 2013, the QR and barcode payment service ‘WeChat Pay’ was launched, and in March 2020, a function called ‘Health ID’ was implemented, which was used to check the health status of users using transport in the wake of the new coronavirus pandemic, and, if an infected person could be identified, to warn those who had been If an infected person can be identified, the system has a function to warn those who have had contact with an infected person in the past, and has been used in a variety of places.
The chart below shows the services that are already in the process of becoming super-apps and the projects that are aiming to become super-apps. The companies whose names you have seen before are listed, and market competition is expected to intensify towards super-applications in the future.
Outside of the country, Discord, a well-known gaming chat app in 2022, started offering mini-games within its platform and a YouTube share-watching app to attract new users, reaching 150 million monthly active users.
Discord's ability to build communities by utilising multiple bots, and its ability to clarify the division of roles within a community and realise smoother organisational management by utilising the ‘role’ function, are also factors in its growth in active users. This is also a factor in the increase in active users.
The introduction of payment functions, etc. and full-fledged development as a super-application has the potential to accelerate market share growth.
In Japan, Mercari, which launched as a flea market app in 2013, is also an app to watch: in February 2019, Mercari's wholly owned subsidiary Melpay will launch a contactless payment service, and in March 2023, its wholly owned subsidiary Melcoin will launch a Bitcoin payment service that allows users to purchase Bitcoin from 1 yen with sales proceeds, balances, points and other funds within Mercari. It offers a system that allows users to purchase bitcoins from as little as one yen.
100,000 accounts were opened just two weeks after the service was released. While the number of crypto asset trading accounts in Japan is estimated to be around 6.4 million, with 60,000 accounts opened per month over the last year, Melcoin's achievement of opening 100,000 accounts in two weeks proves how compatible it is to open new wallets from applications where basic KYC has been completed. The company has also been able to open new wallets from the same application.
Regarding the previously mentioned app WeChat, Elon Musk, CEO of SpaceX, Tesla and X Corp (formerly Twitter), said, ‘WeChat is a Chinese app with features such as banking, ride-sharing, video chat, taxi calls and medical-related features, Twitter, PayPal and many other things in one. It's a really great app, and there's nothing like it outside of China,’ he exclaimed.
In October last year, three weeks before the Twitter acquisition was finalised, he tweeted that ‘buying Twitter is an accelerator to create X, or the all-purpose app “everything app X”’.
And after acquiring Twitter, the company applied for a financial services-related licence with the regulator. The application included details on payment services. Mr Musk's all-purpose app is, needless to say, a super app.
At a Twitter employee meeting, he stated that ‘to reach our goal of one billion users, we need to be like WeChat and TikTok’, and at one point he even said that ‘apps with all kinds of features could take a cue from WeChat’.
These statements suggest that in addition to chat, payment and ride-sharing, which WeChat offers, other functions such as being able to listen to music and play games could also be implemented in the future.
In fact, Musk detailed his plans to enter the payments market at a meeting of advertising clients at TwitterSpaces in November 2022. Esther Crawford, the company's director of product management, stated that the company is currently working on the infrastructure for payment functionality and plans include allowing Twitter users to send money to each other and transfer balances to bank accounts linked to their accounts.
Mr Musk has extensive experience and knowledge of payment and financial services, having co-founded X.com, an early service of the payments giant now PayPal. Furthermore, in the past, he has expressed a desire to introduce bitcoin payments at Tesla, where he is CEO, indicating a high level of interest in crypto assets.
It will be interesting to see how Mr Musk will realise the ‘social networking x wallet’ concept.
On the other hand, there are some question marks over the necessity of Twitter becoming a super-application, and we would like to discuss this once we predict its future development.
Naturally, XCorp. which operates Twitter is not the only one aiming to become a super-app. Existing super-apps are also expected to aim to increase their market share, and competition in the market will intensify.
We would like to consider how users can make use of incentivised marketing in the process of developing various services, in addition to payment, use of entitled NFTs, trading and transfers.
Here, we take Twitter and Mercari as examples. These two are chosen with the intention that familiar applications are easier to imagine when considering them.
First, let's look at Twitter: if you search for ‘$BTC’ in the Twitter search field, you will see a button that says ‘View on eToro’ along with a chart of bitcoin against the US dollar. ‘eToro’ is a trading platform for multiple assets, including crypto assets, stocks and commodities.
It provides real-time prices to Twitter users and allows them to invest using the eToro platform. This leads us to believe that Twitter will continue to work with eToro to enable crypto asset payments, but if you can see the contents of your wallet on Twitter and you use eToro's infrastructure around crypto asset payments, then you have to use Twitter This is not a reason why you have to use Twitter.
A possible option here is the development of a proprietary wallet. The flow of the process would be to complete basic KYC with materials for acquiring payment-related licences and deposit account linkages while developing the wallet, and release the crypto asset settlement function in conjunction with eToro to provide the service until the in-house wallet development is completed.
Once the in-house wallet is completed and linked to Twitter, users will be able to easily have their own Twitter wallet by utilising the payment function and the KYC registration completed at the time of opening a deposit account.
What about Mercari, by contrast? The system that allows users to purchase bitcoins from as little as one yen with sales proceeds, balances and points within Mercari, as mentioned above, is very likely to achieve de facto barter without the need for cash.
Melcoin's corporate website clearly states that ‘By working on blockchain technology that realises value exchange, we will create a new form of transaction in which anyone can easily exchange all kinds of value, including services and digital content, not limited to conventional goods and money, such as NFT (Non-fungible token). As can be seen from the fact that it clearly states that it will ‘create a new form of transaction that allows everyone to easily exchange all kinds of value, not only conventional goods and money, but also services and digital content’, it is an innovative super-application that could even make money a commodity.
In addition to the applications mentioned above, there will be other innovations that go beyond our imagination. Finally, we conclude by showing how users can take advantage of the incentivised marketing that will take place as a result of increased competition in the super-app market.
▶ POINT.1.
Reductions when settling crypto-asset payments
It is conceivable to propose incentives such as preferential treatment of entitled NFTs for making payments via a specific wallet, when an application with a large number of current users has developed a wallet or formed a partnership that can be easily utilised.
In some cases, crypto-asset cashback could be offered, although this is not realistic under current legislation in Japan. The more crypto asset payments are made, the higher the rate of return.
It should be noted in this case that the tax treatment when submitting a tax return could be very cumbersome. In short, while the ability to utilise crypto asset payments offers users more options and therefore a certain level of convenience, the tax treatment in compliance with the Japanese domestic tax system may be a stumbling block for small payments made on a daily basis.
Regular and non-variable fixed costs and other expenditure may benefit from the use of this system.
▶ POINT.2
Fluid community formation
Web 3.0-related projects often utilise a service called Dework. This service is equipped with project management functions, but what sets it apart from other services is that it can be authorised with Ethereum wallets such as MetaMask, and rewards can be paid in tokens when tasks are completed.
This Web 3.0 native functionality is also compatible with DAO formation. If Discord or Twitter were to accept ethereum wallet authentication, community formation could be more fluid than ever before. By making good use of role granting, a validator-like entity may also emerge to monitor problematic behaviour within applications, and SNSs may become self-driven.
Towards the development of SNS in the Web 3.0 domain that may occur in the future, it may be useful in the near future to first get to know the tool Dework and experience playing a part in DAO.
▶ POINT.3
New marketing using big data
Applications starting with social networking and the development of wallets, which will become more active in the future, will be an important element in new marketing strategies.
SNSs, where users take action on what they are interested in and what they buy, reflect the real feelings of consumers in real time. In addition to this, marketing that makes use of wallet data will become more active.
The term ‘wallet share’ is a marketing term. This term refers to the proportion of a company's products and services in an assumed overall market or customer wallet situation.
Until now, this has only been a prediction based on various data, but if crypto-asset-enabled wallets are linked to authenticated social networking accounts, the contents of wallets will be fully visible, although there are still many privacy protection issues to be addressed.
This is expected to enable companies to conduct more accurate marketing. Specifically speaking, advertisements related to the actual entitled NFTs held could flow in line with budgets, or promotions could be applied directly within the wallet.
If companies can utilise big data with such a high degree of accuracy, they will have less trouble AB testing their ad placements than before.
Companies can present the budgets and targets they want to spend to Super Apps, and Super Apps will use the big data, taking into account their financial situation, to create ad creatives with AI that will produce unimaginable results without waste. It's like a catalogue gift that lets you choose.
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