US Payment giant Square today released the whitepaper of its decentralized Bitcoin exchange proposal— tbDEX. This project was first announced by Square and Twitter CEO Jack Dorsey in August.
The project aims to make Bitcoin the native currency for the Internet. “In order to achieve this, the nature of financial institutions needs to evolve. We can either embrace this change — by investing in this future as a public good by rethinking our business models and ways to create value — or we can let this future happen to us,” the company wrote in a blog post.
Explaining the project, the company notes that “people receive wages and pay for goods and services in fiat currency. They must pay taxes in fiat currency. So how do we unleash the potential of bitcoin and decentralized financial infrastructure, when most of us still live in a world of fiat? To do so, we need to build bridges between the fiat and cryptocurrency worlds.”
The project highlights how the upcoming tbDEX would merge the existing gap between fiat currency and Bitcoin. tbDEX is proposed to offer a direct way for people to convert their fiat into Bitcoin without having to go through multiple platforms. “We propose a solution that does not rely on a federation to control permission or access to the network; nor does it dictate the level of trust required between counterparties,” the statement read. “There is no governance token. Instead, the tbDEX protocol allows participants to negotiate trust directly with each other — or mutually and voluntarily rely on trusted third-parties to vouch for the counterparty.”
The abstract available on tbDEX website points out the need of such platform and adds “that the economy should be inclusive. We need to build on-ramps to this future where everyone can access and participate in the economy.”
Clarifying about the transaction fees on tbDex, the abstract explained that it would be determined by the free market, based on the amount of information each participant is willing to disclose. This means that complete anonymity would cost more than full disclosure of personal information. “The tbDEX protocol also facilitates the secure exchange of the minimum necessary identity information acceptable to counterparties in order to satisfy requirements, be they legal, regulatory, or related to any other consideration of risk.”
Meanwhile, Mike Brock, head of strategic development at Square, had earlier tweeted that “this is the problem we’re going to solve: make it easy to fund a non-custodial wallet anywhere in the world through a platform (tbDEX) to build on- and off-ramps into bitcoin. You can think about this as a decentralize[d] exchange for fiat.”