Review on Counterparty by Toprak Dere
About Counterparty
Counterparty puts data into regular Bitcoin transactions, making these transactions appear to Bitcoin clients like normal Bitcoin transactions. There are certain rules that distinguish a Counterparty transaction from a Bitcoin transaction that can be recognized by a Counterparty node.
In other words, Counterparty lies on top of the Bitcoin blockchain rather than being its own separate blockchain.
Counterparty's embedded system, known as the "embedded consensus" system, allows it to work with other blockchains in the crypto space, including side chains.
XCP is a Counterparty local token produced in 2014 through the "Proof of Burn" process that lasted about a month. This process entails sending Bitcoin to an unspendable address and replacing them with an equivalent number of XCPs generated on-site.
Users send their Bitcoins to a verifiably unspendable Bitcoin address where each Bitcoin will be exchanged for 1000-1500 XCP and replaced by the value decreasing with the time it takes for the exchange to execute.
Thus, Bitcoin sent to such an address could never be used again and was therefore considered "burned".
This process succeeded in giving equal opportunity to everyone, including the founders. It also made XCP truly decentralized and fair by ensuring that no one had a pre-existing token offering.
Pros
- The platform is extremely versatile, with more than 30 projects currently in use and under development.
- The value of the token can increase with increasing demand for the platform, making it a good long-term investment opportunity.
- The first cryptocurrency to allow the development and execution of Smart Contracts on the Bitcoin blockchain
Cons
- Counterparty's position in the global market value ranking can be disheartening.
