Square’s Bitcoin DEX a Bright Spot With Market in Doldrums

The bitcoin price might be hovering below the psychologically sensitive $60,000 level, but developers have their noses down and are building. Square is a good example. The payments company is making good on its plans to launch a bitcoin decentralized exchange (DEX) in an attempt to bolster crypto adoption.

Bitcoin Bull

Bitcoin bull and Square CEO Jack Dorsey previously tipped his hand to a new bitcoin DEX that at the time was only a twinkle in his eye. Now Square has shared more details by publishing a whitepaper on the open-source project, which it calls tbDEX.

tbDEX is a protocol that will serve as an on-ramp and off-ramp to bitcoin. They want to simplify the process to fund a non-custodial wallet with bitcoin. Mike Brock, GM of Square’s tbDEX, calls the new endeavor a “decentralized exchange for fiat.”

tbDEX will have no governance token. Instead, it “allows participants to negotiate trust directly with each other — or mutually and voluntarily rely on trusted third parties to vouch for the counterparty,” according to the announcement.  The team lays out a price discovery model for fees that will be “driven by risk.” The more anonymity a user requires, the higher the cost of the transaction. By the same token, a less private transaction should be cheaper.

Square is building its tbDEX from the premise that “bitcoin will be the native currency of the internet,” according to Brock.

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

— TBD (@TBD54566975) November 19, 2021

Square and Bitcoin

Dorsey has been quick to integrate bitcoin into Square’s model, though he has been slower about this when it comes to his other company, Twitter. Bitcoin revenue for Square’s Cash App has been growing hand over fist for the past couple of years but experienced a slowdown in Q3 vs. Q2 levels to $1.82 billion. Square’s Q3 bitcoin gross profit was a lesser $42 million, representing a small slice of the company’s total bitcoin revenue.

Square recently announced support for Taproot, which is a bitcoin upgrade that was activated earlier this month. Square says the Cash App users will benefit from Taproot amid features like better privacy, slashed transaction fees and improved smart contracts.

Bitcoin has shaved about 10% off its value in the past week despite sky-high inflation and its role as a store-of-value asset. The BTC price is currently trading slightly below $59,000.

The BTC price recently hit a peak of more than $68,000.