In Brief:
- Square released a white paper for its decentralized bitcoin exchange tbDEX.
- tbDEX aims to convert funds between fiat and crypto easily.
- The protocol is set to utilize decentralized identity (DID) and verifiable credentials (VCs) to establish identity authenticity in the real world.
Financial services company Square published a white paper outlining the plans for a new decentralized bitcoin exchange titled tbDEX.
As stated in the report, the primary goal of tbDEX is to facilitate the conversion of funds between fiat and cryptocurrency.
The protocol’s goal is to make it easier for those who want to convert their depreciating fiat currency into appreciating bitcoin in the most free-market environment possible.
The paper describes tbDEX as “a protocol for discovering liquidity and exchanging assets (such as bitcoin, fiat money, or real world goods) when the existence of social trust is an intractable element of managing transaction risk.”
The tbDEX protocol seeks to create ubiquitous and accessible on-ramps and off-ramps that will enable the average person to benefit from crypto innovation.
Square’s decentralized exchange will not be anonymous as fiat currencies are processed in the exchange.
Fiat regulation’s character prevents tbDEX partners from processing digital assets anonymously.
According to tbDEX’s introduction statement, the protocol enables the secure exchange of the minimum of identity information required by counterparties to meet requirements, whether it’s legal or regulatory.
tbDEX does not collect or save any personally identifiable information.
The free market would determine transaction fees based on the amount of information each participant is willing to disclose.
As a result, complete anonymity would be more expensive than full disclosure of personal information.
The protocol is also set to utilize decentralized identity (DID) and verifiable credentials (VCs) to establish identity authenticity in the real world.
tdDEX, unlike other decentralized exchange protocols, does not use a trustless model according to the whitepaper.
In the absence of governance tokens, the protocol enables the users to negotiate trust directly with one another or “mutually and voluntarily rely on trusted third-party to vouch for the counterparty.”
Jack Dorsey, CEO of both Square and Twitter, unveiled the plans for the decentralized exchange earlier in August.
Dorsey intended to build a permissionless, decentralized exchange focused on Bitcoin and the white paper is an assurance that Square is on the right track.
