Counterparty and Bitcoin

March 27, 2014

Counterparty uses the Bitcoin blockchain to deliver our transactions, and we have a responsibility and a desire to be conscientious citizens of the Bitcoin community.

Counterparty, as a project, was closely modelled after Bitcoin itself. Counterparty had no ‘IPO’, and its development is entirely supported by community contributions. We have no corporate sponsorships, and the initial distribution of XCP was as fair as could be. Our focus is technology and functionality.

Following the publication of an open letter to the Bitcoin developers regarding the OP_RETURN feature of Bitcoin Core, there was an extensive discussion on Bitcointalk, and some coverage of the issue by CoinDesk. The CoinDesk article has received a lot of interest on Reddit, and we’d like to take this opportunity to address a few common misconceptions, specifically why 80-byte OP_RETURN transactions would be useful for Counterparty.

Counterparty was designed around 80-byte OP_RETURN outputs, to be enabled in version 0.9 of Bitcoind, and the size of which was announced on the official Bitcoin Foundation blog in October. Counterparty was first released in January, and has been using ‘bare multi-sig‘ outputs to embed data in the blockchain, while waiting for the OP_RETURN update.

With 80-byte OP_RETURN outputs, Counterparty could implement these features within Bitcoin in a cheaper and cleaner way. In view of the continued failings of centralized exchanges, Counterparty’s distributed exchange will be especially welcome to the digital currency community: now users can trade digital assets with no middleman or counterparty risk, along with lower fees.

Counterparty helps to further decentralize Bitcoin. Aside from empowering individuals financially, Counterparty will bring more investment into Bitcoin, instead of another blockchain, and will promote wider use of Bitcoin as a financial platform.