Counterparty (cryptocurrency)

Counterparty is digital currency used for peer-to-peer financial trading based on the bitcoin blockchain founded in 2013 by Adam Krellenstein, Evan Wagner, and Robby Dermody. Its key features include mobile wallet, bitcoin-aware smart contracts, decentralized exchange, custom named assets, and being open source. The Counterparty cryptocurrency was developed by a non-profit organization called the Countryparty Foundation. The Counterpart cryptocurrency has is own official cryptocurrency wallet called the Counterwallet that was created by Robert Dermody.

While we’ve become used to calling blockchain assets, tokens, it doesn’t necessarily have to be the case. An asset can represent anything that has value or is rare. As a result, Counterparty steers clear of the word “token” in their marketing and documentation. They’re much more interested in digital assets of all kinds, not just currencies, securities, and utility tokens. Digital assets can be a digital marker of a physical object, an easy way to manage shares in your company, or reputation karma for a website. These are all types of assets you could create on Counterparty (or Ethereum or Waves, for that matter). Counterparty creates the set of rules, requirements, integrations, etc that are necessary for assets on the Bitcoin blockchain. It’s the infrastructure behind user-created assets in much the same way that the ERC-20 protocol sets up guidelines and standards for asset creation on Ethereum.

One useful function of digital assets is as a marker of ownership or voting rights. Imagine a scenario where you issued a digital asset to each of your company’s board members in proportion to the amount of voting power held. Or if you gave your stockholders a digital asset as a marker of the amount of stock they owned. If you issued your stock asset, you could then use Counterparty’s distribution function to pay out dividends in BTC based on the amount of digital stock asset each person owned.

Counterparty addresses many of the same issues as Ethereum or Waves, but on the Bitcoin blockchain. While that does come with some advantages, ultimately it is not as strong a platform for development as its competitors. It’s best suited for applications that need to interface with Bitcoin or assets that have a specific connection to the Bitcoin ecosystem.

Counterparty is represented by the symbol XCP. XCP was created in January, 2014 through a process the company calls Bitcoin "burning' in which Bitcoins were sent to an unspendable address in exchange for XCP. During its creation over 2,100 bitcoins were "burned" and 2.6 million XCP were created and made available on several cryptocurrency exchanges. There are currently four different types of wallets for XCP users, they are: a desktop wallet, a mobile device wallet, a web-based wallet, and a chrome extension wallet.