Square Publishes Whitepaper for its Decentralised Bitcoin Exchange

November 23, 2021, 10:15 AM AEST - 5 days ago

Digital payments giant Square has released a whitepaper through its new TBD division introducing tbDEX, a decentralised crypto exchange that aims to “create ubiquitous and accessible on-ramps and off-ramps that allow the average individual to benefit from crypto innovation”.

The tbDEX protocol will be an easily accessible crypto exchange that aims to bridge users from fiat currencies to Bitcoin and other digital crypto assets.

The vast majority of 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 decentralised 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…

Square’s whitepaper

tbDEX Will Not Be Completely Decentralised

While most decentralised exchanges (DEXs) include a governance token, tbDEX will not utilise a trustless model – instead, it will operate as a message protocol designed to facilitate trust relationships without relying on a federation to control access.

The tbDEX also intends to include features that will generally disqualify it from being considered a completely decentralised exchange. For example, to appease regulators, tbDEX will comply with customer identification regulation such as know-your-customer (KYC) checks. 

There is also controversy surrounding the whitepaper’s proposal to include blockchain analytic solutions, which will either be built into the exchange or operate through the use of a third party, in order to track transactions on the platform. To prevent illicit business activities, such a system would allow authorities to cross-reference payment IDs and public wallet addresses with users’ KYC information to reveal personal identities behind transacting parties.

Potential Game Changer

Bringing some regulation to the crypto space does have its benefits, however; these more centralised features would allow for chargebacks on tbDEX, allowing Square to reverse transactions if needed. This is a game changer as it could potentially protect investors from suffering financial loss (which previously has been irreversible) in the event of a rug-pull scam.

Square CEO Jack Dorsey (also CEO of Twitter) has been active in the crypto space over the years, speaking as a guest at crypto conferences around the world and promoting his companies’ products, such as Square’s crypto-friendly mobile payment application, Cash App.

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