Elon Musk’s XChat Goes Full Crypto: ‘Bitcoin-Grade’ Encryption Sparks Privacy Revolution

Musk’s latest move slashes through Big Tech’s surveillance model—XChat’s blockchain-style encryption lets users reclaim their data. No backdoors, no brokers.

Why it matters: While banks still charge $35 for wire transfers, XChat’s protocol routes around legacy financial gatekeepers. The irony? Wall Street will probably try to ETF-ify it by 2026.

What “Bitcoin-Style” Encryption Could Mean

While Musk did not specify what “Bitcoin-style” encryption means, it can be speculated.

Bitcoin’s blockchain data is not encrypted, but the network is authenticated and permission-less thanks to a tight suite of cryptographic primitives—most notably the secp256k1 elliptic-curve and ECDSA/Schnorr signatures. Those same primitives form the backbone of BIP 324, an opt-in transport layer that encrypts peer-to-peer traffic with an Elliptic-Curve Diffie-Hellman handshake, then secures packets with ChaCha20-Poly1305. The proposal is now partially merged into Bitcoin Core.

Rust implementations of those libraries—rust-secp256k1 and related crates—have been audited for years inside the BTC ecosystem. In practice, they enable a stateless, low-latency channel that retains forward secrecy once the ephemeral key material is discarded. That architecture maps neatly onto Musk’s requirements: encrypted payloads, vanishing messages, and identity decoupled from phone numbers.

Core contributor James O’Beirne has long argued that without transport-layer encryption, “the claim of ‘censorship resistance’ is sort of a bluff while P2P traffic happens in the clear.” Lightning Labs co-founder Olaoluwa Osuntokun told the bitcoin Optech podcast that BIP 324 “is a pretty big bump” because it finally hides link-level metadata for light clients.

If XChat ultimately adopts the secp256k1-based handshake outlined in BIP 324, it WOULD deliver forward secrecy and low-latency performance comparable to Lightning-network transports. As of press time, no independent audit of XChat’s source code has been published, and the precise cryptographic design therefore remains unverified.

A Deeper Musk-Bitcoin Nexus

Musk’s decision to badge the upgrade as “Bitcoin-style” is not merely rhetorical. In February 2021 Tesla disclosed a $1.5 billion BTC purchase in its 10-K filing, calling it a reserve-management strategy. Although the automaker sold roughly 75% of those holdings in Q2 2022, Tesla continues to hold approximately 10,725 BTC on its balance sheet, according to the latest shareholder letter.

Beyond treasury activity, Musk has periodically lent public support to the ecosystem, and initiated a short-lived “Bitcoin Mining Council” in 2021 to discuss renewable energy data.

At press time, BTC traded at $104,879.