Since last September, Jack Dorsey, the founder of Twitter, has made official a decentralized exchange project (DEX) developed by his company Square. Today, this crypto exchange, called tbDEX, is getting concrete with the publication of its white paper.
A decentralized exchange with an à la carte identification level?
Jack Dorsey and his companies Twitter and Square have not stopped their foray into the world of Bitcoin (BTC) and crypto-currencies, to the point where it almost becomes a colonization.
The TBD team, which works around the project of a crypto exchange platform wanted by Jack Dorsey, has recently revealed the white paper of tbDEX:
“tbDEX is a protocol for discovering liquidity and exchanging assets (such as bitcoin, fiat currencies or real-world goods) (…) The tbDEX protocol facilitates decentralized exchange networks between assets, providing a framework for establishing social trust, using decentralized identity (DID) and verifiable credentials (VC) to establish proof of identity in the real world. The protocol does not address anonymity as a feature or consequence of transactions. Instead, it allows willing counterparties to negotiate and establish the minimum acceptable information for the exchange. (…) “
tbDEX: not so decentralized after all
As you may have already realized, but the terms “DEX” and “decentralized” are beyond the border of misuse here, because while the code of the tbDEX protocol is indeed open source on GitHub for the time being, the company Square will keep some control over the transactions.
To begin with, all tbDEX users will have to pass an identity verification (KYC process) to make exchanges, and thus comply with the applicable regulations according to the user’s country.
Secondly, there will be a mechanism for retrocessions on transactions. In other words, Square will be able to reverse transactions on tbDEX. While such interventionism could allow for reversal in the event of dramatic flaws in a DeFi protocol, one can also imagine what this could look like in terms of censorship if, for example, Donald Trump suddenly started wanting to exchange bitcoins and Jack Dorsey didn’t like it.
In addition, tbDEX could integrate a blockchain transaction tracking system. Ideal for tracing (or even preventing) transactions of illicit activities, but very problematic with respect to privacy and the risk of malicious state agencies (talk to Edward Snowden about the NSA to see).
Perhaps conceived as a compromise with the ultra-regulated traditional finance, Square’s tbDEX is therefore quite (very) far from the CypherPunk spirit that usually drives the cryptosphere. In any case, these considerations do not seem to slow down Jack Dorsey’s companies, since a “Twitter Crypto” team has recently been founded, specifically to focus on digital assets and their technologies full time.
