Counterparty (technology)

Counterparty is a peer-to-peer financial platform and distributed, open source Internet protocol built on top of the Bitcoin blockchain and network. Counterparty provides users with the world's first functioning decentralized digital currency exchange,^[1] as well as the ability to create their own virtual assets, issue dividends, create price feeds, bets and contracts for difference.^[2]

XCP

Counterparty has a native currency called XCP. It was originally issued using a provable method called "proof of burn". This method involves sending bitcoins to a special address that renders the coins permanently unspendable. By avoiding funding during its launch, Counterparty has ensured that developers and users have equal financial opportunities. During January 2014, 2100 bitcoins were sent to 1CounterpartyXXXXXXXXXXXXXXXUWLpVr (worth roughly US$1.8 million at the time).^[3] XCP is used in the Counterparty protocol to create new assets, make bets, and perform callbacks on callable assets. "Since Counterparty can't function without XCP, it ultimately represents the value of the network."^[3] Counterparty used proof of burn to issue XCP, instead of a more traditional fund-raising technique for altcoin launches, to keep the initial distribution of funds as fair and decentralized as possible, and to avoid potential legal issues.^[3][4]

Assets

Counterparty allows the creation and issue of assets on top of the blockchain. Assets can be traded for Bitcoin and XCP on the decentralized exchange, and dividends (also known as payment distributions) can be paid out. Additionally, people can use this system to create derivatives, bets, prediction markets, and play trustless rock-paper-scissors.^[3]

Software

counterpartyd is the reference implementation of the Counterparty protocol, and Counterwallet is a deterministic web-wallet frontend to counterpartyd, in which all cryptography is handled client-side. Both are open source and hosted on GitHub.^[5]

Notable assets and issuers

• LTBCoins: Let's Talk Bitcoin, a podcast about Bitcoin, has launched a Counterparty asset called 'LTBCOIN'. LTBCoins will be used to pay contributors to the show, and to sell all advertising space.^[3][6]

• Permacredits: The Permacredits project, led by Xavier Hawk, issues the asset CREDITS, which "aims to support the global permaculture movement's goal to create sustainable economic ecosystems that respect and nurture the environment. Permacredits will be issued using Counterparty and exchanged for bitcoins, which will be used to fund permaculture-related start-ups."^[3][7][8]

• Digital Tangible: Digital Tangible: Bitcoin Tangible Trust, Digital Tangible issues gold-backed receipts on the Counterparty platform to customers that purchase gold products on their site. These receipts can be traded, redeemed, or used for payments.^[3]

References

External links

• Counterparty Project Homepage
• Counterwallet
• Blockscan
• Official Counterparty Forum
• LTBCoin (Counterparty asset)
• Swarm (Counterparty asset)
• SCARAB (Counterparty asset)
• Digital Tangible (Counterparty asset market)