Jack Dorsey’s Decentralized Bitcoin Exchange White Paper Released Friday

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Jack Dorsey, co-founder and CEO of Square and Twitter, released a white paper on Friday detailing Square’s tbDEX decentralized Bitcoin exchange (BTC) plans. Unlike most decentralized exchanges, or DEXs, tbDEX will not use a trustless model and therefore will not have its own governance token. Rather, it is a message protocol designed to facilitate trust relationships without depending on a federation to control access.

The tbDEX also intends to include a lot of features that make it much less decentralized than a DEX in the true sense of the word. To begin with, the protocol requires all participants to pass Know Your Customer, or KYC, checks to comply with relevant regulations depending on the user’s region. Users can then only connect their wallets to the exchange and exchange coins with each other.

Additionally, the white paper called for the deployment of blockchain analytics solutions, either integrated with DEX or through a third party, to track transactions on the platform. Such a class of blockchain forensic solutions is potentially a controversial topic. Such a system would likely allow authorities to cross payment IDs and public wallet addresses with KYC information to reveal the personal identities of the parties to the transaction. However, supporters say such means of surveillance are necessary to prevent illicit activity.

But the centralized functionality of tbDEX could also gain the support of crypto enthusiasts. A distinctive aspect discussed in the white paper is chargebacks, which does not exist on most DEXs. If implemented, Square’s ability to cancel trades on tbDEX could potentially halt the irreversible losses incurred by investors in decentralized financial carpet draws. Square is currently encouraging comments on the white paper on a newly created Twitter account.

We did a white paper. https://t.co/ffvYGjQQ7T

– TBD (@ TBD54566975) November 19, 2021

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