Counterparty (technology)

Not to be confused with counterparty.
Counterparty
Developer(s) Robby Dermody, Adam Krellenstein, Ouziel Slama, Evan Wagner
Stable release 1.3.0
Written in Python, JavaScript
Operating system Cross-platform
License MIT
Website counterparty.io

Counterparty is a financial platform for creating peer-to-peer financial applications on the bitcoin blockchain. The protocol specification and all Counterparty software is open source. The reference client is counterpartyd and a web wallet called Counterwallet showcases all protocol features. The protocol’s native currency, XCP, is the fuel that powers Counterparty. It is slightly deflationary, with approximately 2.6 million XCP having been created by burning Bitcoins in January 2014. 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

XCP Symbol

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, 2125.63 bitcoins[3] were sent to 1CounterpartyXXXXXXXXXXXXXXXUWLpVr[4] (worth roughly US$1.8 million at the time).[5] XCP is used in the Counterparty protocol to create new assets, make bets, and perform callbacks on callable assets. 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.[5][6]

Assets

With Counterparty, users can create their own currencies inside the bitcoin blockchain. These are separate from bitcoin the currency itself, but exist entirely inside ordinary bitcoin transactions. Tokens can be received, stored, and sent from any bitcoin address to any other. They can also be placed in cold storage. Counterparty tokens are not tied to the BTC balance of any given address. This means that sending/receiving bitcoins has no effect on the balance of tokens. Among other features, Counterparty adds the ability create, send, trade, and pay distributions on assets, in a fully decentralized and trustless manner. While Counterparty has its own internal currency (XCP), trading and creating assets does not require anything apart from regular bitcoin transaction fees.

Many of the features described below can be accessed using the Web-based Counterwallet. Especially casual users and those without a counterparty-cli setup can benefit from the convenience of Counterwallet. Counterparty-issued assets (tokens) can have plain-text or Enhanced Asset Information.

Creating Assets

Counterparty allows users to issue assets. An asset that is created within the Counterparty protocol is often called a user-created token. User-created tokens are just as real as XCP or even BTC. With the asset issuance function, every user has the ability to create a new currency project inside the bitcoin and Counterparty ecosystem.

You can create two different types of assets:

  1. Named: A unique string of 4 to 12 uppercase Latin characters (inclusive) not beginning with ‘A’. Alphabetic tokens carry a one‐time issuance fee of 0.5 XCP to discourage spam and squatting. This fee is burned (permanently taken out of circulation). BTC and XCP are the only three‐character asset names.
  2. Numeric (Free): An integer between 26^12 + 1 and 256^8(inclusive), prefixed with A. Numeric assets only require one bitcoin transaction fee to be created.

The different kinds of assets

The most basic kind of asset must specify:

It is possible to issue more of asset, but, at any one time, there can only be one address which issues asset. With that said, the Counterparty protocol allows source to transfer issuance rights of asset. Moreover, an asset can also be locked, so that there can be no further issuances of it. (See the examples for instructions on how to do this withcounterparty-cli). A description must always be included, even ifdescription is just an empty string; the syntax of an asset with no description is description="".

Beyond creating the most basic asset, it is also possible to make assets either divisible or callable. If an asset is made divisible (or callable) upon its initial issuance, it must always be divisible (or callable) with every issuance thereafter. A divisible user-created asset is, like, bitcoin and XCP, divisible up to 8 decimal places. A callable asset is an asset which the issuer can call back (i.e. repurchase) from its owners at a date (call-date) and for a price (call-price) specified at the initial issuance.

Sending Assets

To send an asset in Counterparty, one must specify:

Paying distributions on assets

It is possible to distribute funds proportionally among asset holders using the distribution function. This feature is also known as dividend payments, depending on their desired purpose. Distributions are paid in any distribution_asset to everyone who holds the asset in proportion to how many units he holds; specifically: Let total equal the total distribution paid out, and quantity be the total amount of asset, then: quantity-per-unit = total/quantity

Distributions can be paid out to any assets that you ownership and control over. You can freely select the currency in which distributions are to be paid out: BTC, XCP, or any other user-created asset.

Use-cases

Decentralized Exchange (DEX)

Counterparty supports peer-to-peer asset exchange: users can trade assets with no middleman and no counterparty risk. The platform upon which trading is done is Counterparty’s decentralized exchange and the bitcoin blockchain. In what follows trading on the decentralized exchange will be detailed and explained by means of examples. For the purposes of the following use-cases:

Creating an order

At its most basic level, a trade on Counterparty’s decentralized exchange consists of two orders, which are matched by the protocol. When Sally is constructing her order, she must specify:

Software

Screenshot of Counterwallet Homepage

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.[7]

Notable assets and issuers

Block Explorers

Since Counterparty Assets are created within the bitcoin blockchain, the assets actually exist in any bitcoin block explorer, however, to decode the information on what bitcoin address has what asset an additional layer of block exploration needs to be applied. Currently there are two block explorers you can use to locate Counterparty assets in bitcoin wallets:

References

  1. Bromden, Stanislas (2014-04-10). "Counterparty to Create First Peer-to-Peer Digital Asset Exchange Platform". CoinTelegraph. Retrieved 2014-04-27.
  2. Bradbury, Danny (2014-03-25). "Developers Battle Over Bitcoin Block Chain". CoinDesk. Retrieved 27 March 2014.
  3. "Counterparty XCP Block Explorer :: Proof Of Burn". blockscan.com.
  4. "Bitcoin Address 1CounterpartyXXXXXXXXXXXXXXXUWLpVr". blockchain.info.
  5. 1 2 Alex Brokaw (2014-04-16). "The People Who Burn Bitcoins". Minyanville. Retrieved 2014-04-26.
  6. Swanson, Tim (2014). "Chapter 3: Next Generation Platforms". Great Chain of Numbers a Guide to Smart Contracts, Smart Property and Trustless Asset Management. Self-published. Retrieved 2014-04-26.
  7. Robby Dermody (2014-04-24). "Counterparty: Enabling Decentralization with Insight". bitcore blog. Retrieved 2014-04-26.
  8. "Counterparty XCP Block Explorer :: Asset Information". blockscan.com.
  9. "What is Storj". Storj.io. Storj Team.
  10. "The FoldingCoin White Paper" (PDF). foldingcoin.net. FoldingCoin Team. Retrieved 2015.
  11. "Counterparty XCP Block Explorer :: Asset Information". blockscan.com.
  12. "How Swarm Plans to Become the Facebook of Crowdfunding". Retrieved 2015-08-01.
  13. "Counterparty XCP Block Explorer :: Asset Information". blockscan.com.
  14. 1 2 EverdreamSoft. "Spells of Genesis - The First Game that Uses Bitcoin and Blockchain Technology". www.spellsofgenesis.com. Retrieved 2015-08-01.
  15. "Counterparty XCP Block Explorer :: Asset Information". blockscan.com.
  16. "Counterparty XCP Block Explorer :: Asset Information". blockscan.com.
  17. https://xcpassets.org/all-assets/

External links

This article is issued from Wikipedia - version of the Friday, April 22, 2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.