Jack Dorsey’s TBD released a white paper for decentralized Bitcoin exchanges

The first product of Bitcoin-centric TBD will be tbDEX. They called it a “liquidity agreement” decentralized exchange in their recently released white paper. The Bitcoin network does not require permission, and anyone with an Internet connection can join at any time. However, the Fiat world we live in is not like that. The banking system has endless requirements for participation, and these requirements make a large part of the population unbanked and vulnerable. “We believe that the economy should be inclusive. We need to establish a gateway to the future so that everyone can enter and participate in the economy,” TBD said Announce tbDEX’s post.

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A subsidiary of Jack Dorsey Square, They created pending “The sole goal is to easily create non-custodial, permissionless and decentralized financial services for Bitcoin.” And now, they have a plan.

What is the value proposition of TBD?

It is clear that tbDEX aims to “build a bridge between the fiat currency and the cryptocurrency world”. We still live in the fiat currency world. If Bitcoin is to succeed, we need new, simpler, and cheaper ways to interact with the world. “Realizing this vision faces severe challenges. Fiat currencies are regulated, and any interface with the traditional monetary system or the “real world” cannot be completely trusted.”

So, what solution does TBD propose? tbDEX will allow participants to interact and trade with each other Like Bisq And similar projects. However, TBD will also allow users to “mutually voluntarily rely on trusted third parties to provide guarantees for counterparties.”exist The white paper itself, To be determined, participating financial institutions or PFIs will become part of the network.

“PFI can be, but is not limited to, fintech companies, regional banks, large institutional banks or other financial institutions; PFI can use legal payment systems and can promote legal payments in exchange for cryptocurrency assets, and vice versa.”

tbDEX will provide financial institutions with tools for KYC and AML procedures:

“The agreement will also carry the regulatory liquidation information required by the PFI to conduct AML and KYC checks before providing liquidity to the wallet owner. However, the necessary information may vary by jurisdiction.”

Wait a minute…A decentralized exchange that requires KYC? What’s the point of that? Well, the agreement does not require KYC procedures, but some institutions may do so. The good news is that if participants are unwilling, they don’t have to deal with these institutions. They can communicate with each other and build trust in other ways.

BTC price chart for 11/20/2021 on FX | Source: BTC/USD on TradingView.com

The price of anonymity

This is where it becomes interesting. According to the white paper:

“The tbDEX protocol uses decentralized identity (DID) and verifiable credentials (VC) to establish a source of identity in the real world by providing a framework for establishing social trust, and promotes a decentralized exchange network between assets.”

It is important to note that “the agreement itself neither collects nor records any personally identifiable information.” However, if the participant wants to be anonymous, he or she is responsible for optimizing it. Again, the white paper:

“Our goal is not to maintain the anonymity of transactions at all costs. Nor is it to weaken the ability of individuals to optimize anonymity. In principle, anonymous transactions on financial privacy on the tbDEX network are not excluded. In principle, PFI may not need VC, but such transactions Will bring a high degree of risk to counterparties.”

It takes money to take risks. It’s that simple. The announcement post says it well.

“Transaction costs are ultimately driven by risk. In the case of maximum anonymity, transaction costs are bound to be higher; when disclosed to the greatest extent, they should be lower. This method of price discovery allows the market to find the right balance. .”

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If you have suggestions, please send them to TBD

The white paper is the final rough outline of tbDEX.

“The first draft of this white paper aims to establish a conceptual understanding of the high-level design of the proposed tbDEX protocol. It should not be considered complete or final. It represents a proposed design for public comment.”

If you have any suggestions, please contact To be determined via Twitter Or send them Pull request on GitHub.

Featured Image: tbDEX diagram from the whitepaper | Charts by TradingView

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