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Square exec: How do you build a decentralized Bitcoin exchange?

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Square executive Mike Brock tweeted about the idea behind a decentralized platform that uses fiat coins to trade bitcoin.

How Does Square Build a decentralized Bitcoin Exchange?

Source: Chain news

原文作者：Perry Wang

On Friday, Twitter co-founder Jack Dorsey tweeted details of Square's DeFi service, saying the new service will aim to build "an open platform to create a DEX dedicated to bitcoin." That means Jack Dorsey's Square is one step closer to launching a decentralized bitcoin exchange (DEX).

It also marks the first foray into decentralized finance (DeFi) by a major player outside the crypto space, and will set Square clearly apart from other payment company apps such as PayPal and Stripe.

While other payment services such as PayPal have dabbled in buying and selling cryptocurrencies, Square's entry into DeFi takes its commitment to blockchain and cryptography to a new level. DEX relies on blockchain technology, which allows users to conduct peer-to-peer crypto transactions using automated contracts.

Square, which now makes most of its money processing payments for businesses and consumers, has been bullish on Bitcoin. Consumers can buy bitcoins through its Cash app. Square itself bought $220 million worth of cryptocurrency as an investment last year.

Square's early embrace of cryptocurrencies dovetails with co-founder and CEO Jack Dorsey's stance on bitcoin. Dorsey has said cryptocurrencies will eventually unify the world. Square could use DEX to get more people involved in bitcoin transactions.

Other Square executives have hinted at details of the structure of the new business. While it's unclear which blockchain network DEX will be built on, the Bitcoin blockchain could be one of the contenders. "We want it to be Bitcoin-native, head to toe," Mike Brock, head of the division, tweeted Friday.

Bitcoin-based DEX is unusual because most DEX, like dYdX and Uniswap, are built on top of the Ethereum blockchain, which has greater ability to automate contracts. However, Dorsey said he prefers Bitcoin BTC to Ethereum's cryptocurrency ETH. If Square follows its leader's lead, it could end up shaking up how mainstream payment providers think about the market -- and how those platforms work.

How does Square DeFi service set up a decentralized bitcoin trading platform? Square executive Mike Brock posted a series of tweets explaining the thinking behind the new initiative. Brock took over as general manager of Square's "TBD" business unit in July 2021, according to Linkedin, to lead efforts to "decentralize everything."

Here's what Mike Brock tweeted:

1. There is a lot of speculation about what Square TBD is and is not. Over the past few weeks, our team has been identifying what needs to be identified. We'd like to finally share the direction of the team, and we have some questions we'd like to discuss.

2. We believe bitcoin will become the native currency of the Internet. While there are many projects that could help the Internet become more decentralized, our focus is on building a robust global monetary system for all. However, we believe there are some missing pieces that need to be present.

3. To buy bitcoin today, people usually need to exchange fiat currency in a centralized and managed service, such as Cash App or Coinbase. These fiat channels into and out of Bitcoin are fraught with problems and are not evenly distributed around the world.

4. Here's the problem we're hoping to solve: a platform that makes it easy to fund unmanaged wallets anywhere in the world to build an entry point for Bitcoin. You can think of it as a decentralized trading platform, or DEX, that can be traded in fiat currency.

5. As we said, the platform will be developed entirely in an open, open source, open protocol manner and can be used by any wallet. There is no infrastructure or governance model controlled by the TBD team. The platform does not require a license.

6. We want it to be Bitcoin-native, head to toe. This leads us to consider solutions such as RSKsmart, but the gap that would need to be filled in order to build this project may be too large, and also leads us to consider other chains as Bridges.

7. Some of the gaps we're seeing are related to cost and scalability. Lightning, the Lightning network, is tackling this problem with payments. We need to address the infrastructure of exchange between digital assets, such as stablecoins.

8. The questions and challenges that come to mind are as follows: What projects are out there that can help us solve these problems in the bitcoin native way? Now that we've set the course, you'll hear more from us as we make progress. But for now, thanks to bitcoin residents.