Jack Dorsey, co-founder and CEO of Square and Twitter, released a white paper on Friday outlining Square’s plans for the tbDEX decentralized bitcoin exchange (BTC). Unlike most decentralized exchanges or DEXs, tbDEX will not use an unreliable model and will therefore not have its own control token. Instead, it is a messaging protocol designed to facilitate trust without relying on the federation to control access.
tbDEX also intends to include more features that will make it less decentralized than DEX in the true sense of the word. First, the protocol requires all participants to go through a Know Your Customer or Know Your Customer experience to verify that the correct rules are followed based on the user’s region. Only then can users connect their wallets to the stock exchange and exchange currency with each other.
In addition, whitepaper requires the distribution of blockchain analytics solutions embedded in DEX or through third parties to track transactions on the platform. This class of blockchain-based forensic solutions is likely to be a controversial topic. Such a system would potentially allow authorities to match payment IDs and public wallet addresses with KYC information to reveal the identities of the parties to the transaction. However, supporters claim that these monitoring tools are necessary to prevent illegal activity.
But the basic features of tbDEX can also be supported by crypto enthusiasts. One aspect discussed in the White Paper is reversals, which are not found in most DEXs. If implemented, Square’s ability to reverse tbDEX transactions can prevent irreversible losses incurred by investors under DFF. Square is currently encouraging comments about the official document on the newly created Twitter account.
