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Square presents tbDEX Protocol for enhanced trust in decentralized BTC exchange

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  • Square has announced the proposal for the exchange of Bitcoin without using any centralized control.
  • tbDEX Protocol will bridge fiat money with Bitcoin and other digital assets.
  • They have shared the tbDEX Whitepaper for public access. 

In the recently published Whitepaper, Square has put forward a decentralized bitcoin exchange proposal (tbDEX) to ensure the safe exchange of Bitcoin and other digital assets in a decentralized environment of trust, not compromising quality. TBD, a business created by Square, has released its Whitepaper for the tbDEX protocol this Friday.

The arena of blockchain and other technologies is changing rapidly. These changes are limited not only to improvements in the pre-existing technologies but also include some breakthroughs. In recent days, if there is some significant development in blockchain transactions that is worth calling a breakthrough, then it is tbDEX. Square, a reliable and now trending blockchain, has developed the protocol to tackle the problem of trust in exchanges.

Square’s CEO, Jack Dorsey, and his team worked on this project and successfully presented a solution to tackling the risk issue in exchanges using blockchain. They have released the details of this project on their website and invited developers to work further on it. It has been compared to the significant development in the form of the Bitcoin whitepaper. Now, tbDEX is a continuation of it, ensuring that the aims of the Bitcoin project are taken to new horizons.

tbDEX conforms with Bitcoin, rethinking business models

Square has announced that the tbDEX conforms to the aims of the Bitcoin project, i.e., the participation of individuals in digital transactions does not involve any third party, ensuring trust and accessibility. The main idea behind their Whitepaper is inclusivity, guaranteeing individuals to participate in the digital economy and have open access to it without any restrictions.

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tbDEX has been termed as ‘rethinking of business models,’ which will help evolve the complete process. It is a futuristic project that keeps in view the needs of the Bitcoin blockchain system and the evolution of business models. Square aims to do it by creating value using the tbDEX. It is a future whose importance nobody can deny; they claim it was supposed to happen, and they have laid out the possibilities in the form of the tbDEX Whitepaper. They have published the details of the protocol on GitHub, outlining the details of the project.

Solving the trust Issue – tbDEX

The main problem, as per the announcement, is the replacement of fiat money. Though it is not possible currently, a replacement can be sought in the form of bridging the two, i.e., fiat money and blockchain currency. Once this is done, it will be easy for users to utilize blockchain/crypto assets for their daily needs. This will lead to a system where the trust issue won’t be compromised, and accessibility will be easily possible. This protocol aims to bring crypto’s use to daily life.

Keeping the trust issue in view regarding the blockchain transactions, DIDs are used. The problem arises if this is not adequately implemented and facilitated. The proposed solution to this problem is the tbDEX protocol which will help with the negotiation of trust directly on an individual level; they can also involve a third party if both parties consent to it. They will make a transaction on a risk basis which will demand transaction costs.

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An easy solution using the tbDEX is the transaction costs being directly linked with anonymity or disclosure. If a party discloses more of their identity, the lower costs they will pay for the transaction. This way, trust and anonymity are directly linked. To fulfill the legal or other requirements, this protocol will also help exchange information between parties. What makes it more reliable is the encryption of information so that even the protocol cannot collect the information, nor is it kept in the record.

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Wen moon? Data shows pro traders becoming more bullish on Bitcoin price

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MicroStrategy’s purchase of 7,002 BTC might have helped boost Bitcoin price today, but derivatives data also shows that pro traders are becoming more bullish.

The $4,700 Bitcoin (BTC) price spike on Nov. 29 was likely a great relief for holders, but it seems premature to call the bottom according to derivative metrics. 

This should not come as a surprise because Bitcoin price is still 15% below the $69,000 all-time high set on Nov. 10. Just 15 days later, the cryptocurrency was testing the $53,500 support after an abrupt 22% correction.

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Today’s trend reversal was possibly encouraged by MicroStrategy’s announcement that it had acquired 7,002 Bitcoin on Monday at an average price of $59,187 per coin. The listed company raised money by selling 571,001 shares between Oct. 1 and Nov. 29, raising a total of $414.4 million in cash.

More bullish news came after German stock market operator Deutsche Boerse announced the listing of the Invesco Physical Bitcoin exchange-traded note or ETN. The new product will trade under the ticker BTIC on Deutsche Boerse’s Xetra digital stock exchange.

Data shows pro traders are still neutral-to-bullish

To understand how bullish or bearish professional traders are positioned, one should analyze the futures basis rate. That indicator is also known as the futures premium, and it measures the difference between futures contracts and the current spot market at regular exchanges.

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Bitcoin’s quarterly futures are the preferred instruments of whales and arbitrage desks. Even though derivatives might seem complicated for retail traders due to their settlement date and price difference from spot markets, the most notorious benefit is the lack of a fluctuating funding rate.

Bitcoin 3-month futures basis rate. Source: Laevitas.ch
The three-month futures typically trade with a 5%–15% annualized premium, which is deemed an opportunity cost for arbitrage trading. By postponing settlement, sellers demand a higher price and this causes the price difference.

Notice the 9% bottom on Nov. 27, as Bitcoin tested the $56,500 support. Then, after Monday’s rally above $58,000, the indicator shifted back to a healthy 12%. Even with this movement, there is no sign of excitement, but none of the past few weeks could be described as a bearish period.

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Lending markets provide additional insight

Margin trading allows investors to borrow cryptocurrency to leverage their trading position, therefore increasing the returns. For example, one can buy Bitcoin by borrowing Tether (USDT), thus increasing the exposure. On the other hand, borrowing Bitcoin can only be used to short it or bet on the price decrease.

Unlike futures contracts, the balance between margin longs and shorts isn’t necessarily matched.

OKEx USDT/BTC margin lending ratio. Source: OKEx

When the margin lending ratio is high, it indicates that the market is bullish—the opposite, a low lending ratio signals that the market is bearish.

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The chart above shows that traders have been borrowing more Bitcoin recently, because the ratio decreased from 21.9 on Nov. 26 to the current 11.3. However, the data leans bullish in absolute terms because the indicator favors stablecoin borrowing by a wide margin.

Derivatives data shows zero excitement from pro traders even as Bitcoin gained 9% from the $53,400 low on Nov. 28. Unlike retail traders, these experienced whales avoid FOMO, although the margin lending indicator shows signs of excessive optimism.

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Bitcoin, Ethereum and Two Smart Contract Competitors Are the Winners Among Institutional Investors, According to Crypto Asset Manager CoinShares

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Leading digital asset manager CoinShares says institutional investors have a strong appetite for Bitcoin (BTC) and three leading smart contract platforms.

According to the firm, the overall crypto market correction has left investors hungry for more.

“Digital asset investment products saw inflows of US$306m last week suggesting [a] continued appetite for digital assets.”

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As usual, BTC led all digital assets in terms of capital inflows, this time in the wake of a new exchange-traded product (ETP) set to launch on the Deutsche Borse exchange.

“Bitcoin saw the largest inflows in 5 weeks totaling US$247m following the launch of another investment product in Europe. This brings the 11 week run of inflows to US$2.7bn.”

BTC is trading at $58,475 at time of writing, up nearly 6% on the day.

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The leading smart contract platform Ethereum (ETH) concluded a strong month of inflows with a week totaling over $23 million.

“Ethereum saw inflows totaling US$23m last week, marking its 5th consecutive week of inflows.”

This week’s big winners in inflows relative to assets under management (AuM) also include the scalable smart contract platform Solana (SOL) and the interoperable blockchain Polkadot, which is designed to support multiple layer-1 smart contract protocols.

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“In terms of inflows relative to AuM, Polkadot and Solana continue to be the winners, with inflows representing 8.6% (US$11.5m) and 5.9% (US$14.6m) of AuM respectively last week.”

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Source: CoinShares

Ethereum is currently trading at $4,453.79, up 7.5% in the last 24 hours. SOL and DOT are trading at $211.48 and $36.82, respectively, at time of writing.

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Nayib Bukele sends cryptic response to Bank of England over Bitcoin law criticism

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  • Nayib Bukele questions England love for El Salvador over Bitcoin adoption.
  • England expreses concern over El Salvador Bitcoin law.
  • Outside England IMF also criticized El Salvador over Bitcoin law.

After he expressed concerns over Bitcoin adoption in the country, El Salvador President Nayib Bukele has sent a cryptic response to the Governor of the Bank of England, Andrew Bailey.

Over the weekend, Bailey said he is not a fan of bitcoin or its growing adoption in countries like El Salvador. He expressed concerns while speaking at Cambridge University, asking if Salvadorians are aware of Bitcoin’s volatility.

“It concerns me that a country would choose it as its national currency,” Bailey said in response to a question at an appearance at the Cambridge University student union on Thursday. “What would worry me most of all is, do the citizens of El Salvador understand the nature and volatility of the currency they have.”

Bank of England is not the only international body to express concerns over Bitcoin adoption by El Salvador. Since June, when the Central American country announced its Bitcoin intention, numerous global financial organizations have tried to warn the country not to do it.

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Outside the Bank of England, the IMF also criticized the move by the country.

Nayib Bukele’s cryptic, Ironic response

While addressing Bailey’s most recent comments, President Bukele responded in a tweet pointing at the “genuine” concerns that the BOE has for the people of El Salvador.

“Bank of England is “worried about El Salvador’s adoption of Bitcoin? Really?

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I guess the Bank of England’s interest in the well-being of our people is genuine. Right?

I mean, they have always cared about our people. Always.

Gotta love Bank of England,” he wrote.

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El Salvador adopted Bitcoin as its legal tender months back, and according to Nayib Bukele, there has been progress since the country made the move.

For instance, the nation has used the aforementioned volatility, especially when the price dips, to accumulate more portions of the asset and to use the profits when the price increases to make plans for buying pet hospitals or new schools.

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El Salvador adopted Bitcoin as its legal tender months back, and according to Nayib Bukele, there has been progress since the country made the move.

For instance, the nation has used the aforementioned volatility, especially when the price dips, to accumulate more portions of the asset and to use the profits when the price increases to make plans for buying pet hospitals or new schools.

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