Square introduced its own decentralized exchange called tbDEX. The exchange aims to fill the existing gap between crypto and fiat and facilitate easier transactions between the two. It will work without a governance token and trust on the platform will be party enabled, not authority enabled.
The Bitcoin whitepaper laid out a vivid monetary vision for the world. It envisioned a world where third parties were not required to conduct business among willing participants. Therefore, ultimately forcing the economy to become more inclusive. There have been numerous developments in the world of crypto since then. However, the world today is far from that vision. A majority of individuals receive their monthly income in terms of fiat currencies. We pay for taxes, goods and services using fiat currency.
Therefore, a majority of us experience a gap between fiat and cryptocurrencies. The current financial system does little to fill this gap. Well, thankfully the big guns have moved in to solve this problem. Square, the U.S payments giant is attempting to develop a decentralized platform called tbDEX. The platform will facilitate an easier exchange of value between Bitcoin and fiat currencies. In doing so, tbDEX will be the crucial on-ramps for people who do not participate in the crypto economy.
What is tbDEX?
It is the decentralized exchange being developed by Square. Recently, Jack Dorsey announced that Square had released a white paper detailing how the platform would work.
They had realized it on Github to allow for contributions from the community. The platform aims to facilitate the exchange of assets by providing a framework for social trust. In order to achieve this tbDEX wants to use decentralized identity (DID) and verifiable credentials (VCs). However, the main aim of tbDEX is to make access to crypto services easy. This decentralized exchange will allow people to exchange Bitcoin to fiat and vice versa with extreme ease. Consequently, it will allow average individuals to enjoy the benefits of crypto.
Currently, there are plenty of exchanges that allow access to Bitcoin and other cryptocurrencies. This makes it seem like Bitcoin is decentrally available to all. However, the power still lies with a central structure such as exchanges, for example, Coinbase, Binance etc. Therefore the development of a decentralized exchange is the perfect stroke.
How does tbDEX work?
tbDEX will work in a decentralized fashion without recording any personally identifiable information. Instead, the platform will facilitate the exchange of minimum necessary identity information for the counterparties to satisfy their requirements. Additionally, the platform will work without a governance token as well. The platform aims to allow participants to negotiate trust amongst themselves without a central structure establishing trust. Moreover, transaction costs are to be driven by risk. In case of minimum anonymity, the transaction costs drop low. In return, when the anonymity is maximum the transaction costs rise up.
Square already provides Bitcoin transactions through its CashApp. This is an important addition to its arsenal of crypto innovations. This will remove crucial entry-level barriers for early-stage investors. Moreover, it will provide a platform to fill the gap between fiat and crypto. Read the white paper to know more about the platform.