Over the past 10 months Counterparty has become one of the most interesting projects in Bitcoin. The recent inclusion of Etheruem's open source code is by no means the only innovative aspect.
With XCP recently breaking 10USD for the first time, and Counterparty’s round of groundbreaking announcements, the platform and its growing stable of partners could well be the future cornerstone of Blockchain finance.
Started in Jan 2014, Counterparty was touted as providing financial tools for, “extending Bitcoin’s functionality from a peer-to-peer payment network into a full fledged peer-to-peer financial platform.” While this has been a theoretical venture for the most part, recently its been making huge progress.
Overstock announced their partnership with Counterparty to create Medici, “a front-end and portal to the decentralized stock exchange of the Counterparty platform”. Overstock CEO Patrick M. Byrne has a history of progressive financial ideals. Byrne initiated a Dutch auction IPO of Overstock.com in 2002. He is known for his campaign against the practice of naked short selling, and has filed two lawsuits alleging improper acts by Wall Street firms, a hedge fund, and an independent research firm.
Counterparty have now announced the inclusion of Ethereum‘s open source code, while on the same day surpassing 100,000 network transactions.
“The limitation of Counterparty up to now has been that all of its smart contracts have had to be hard‐coded into the protocol’s reference client by a set of core developers (as is the case with Bitcoin itself). This means that the addition of new features has been much slower than it needed to be. The solution to this problem is to allow users to write their own smart contracts, which they (and other contracts) can execute whenever they want. This is the basic model of Ethereum, which is a project to create a novel blockchain in addition to a programming language and virtual machine for the creation of smart contracts.”
Traction is one of the key hurdles in achieving success. With partners such as Vennd, bitSIM, Overstock and Ethereums open source code, Counterparty looks like its position within the blockchain industry is solidifying. 100,000 network transactions is no mean feat.
There is a sting in the tail of this new and innovative financial structure, “By its nature Counterparty is decentralized and pseudo-anonymous so the Counterparty project cannot ban or prevent asset squatting and fraudulent issuance of assets.”
This is why regulators are struggling with Bitcoin, and the blockchain solutions that are developing. While projects such as Storj have completed successful crowdsales, raising funds selling their asset SCJX on Counterparty. Other Assets for sale have names that are misleading at best, “MaidSafe management has confirmed that MAIDSAFE and MAID are two assets listed on not only Counterparty, but also Dogeparty (a Counterparty fork that works on the Dogecoin blockchain), that are not in any way related to MAID (MaidSafe) listed on the Mastercoin or the MaidSafe Project itself.“
Regulators have the tricky task of balancing consumer protection without stifling innovation. This is no easy task in traditional markets, let alone a burgeoning market such as Bitcoin.
Bitcoin has re-introduced the idea that participants in an organisation should be awarded proportionally for their effort. Assets such as XCP and Storjcoin X provide an incentive for participants in the Counterparty and Storj networks, its how Bitcoin became the decentralized network it is today. Participate, reward. Money for effort. This co-operative structure is by no means a new idea Rochdale Principles introduced in 1844 state, “"Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination."
The internet has made this a globally achievable ideal, Bitcoin demonstrates how its done, capitalism provides the incentive.
Projects like Storj provide an obvious example for easy involvement. If you think a project like this is a great idea you can participate in the network and receive a financial reward. This removes the need for altruism, and generates networks with vested interest. If you like the project and want to use its services you can buy the assets required to purchase the services on offer. This gives Bitcoin some level of future proofing. As it stands Bitcoins asset is the reserve currency for trading in and out of assets for other networks. The Bitcoin currency is the backbone of the new industry based on blockchain technology.
Vennd provides another example of how to get involved, by providing an easy route for access to counterparty tokens. Vennd.io provides open source software that allows the exchange of assets. Send Bitcoin to a vennd wallet address, receive counterparty assets in return. By including the vennd functionality on a website, or anything connected to the internet, you can do some amazing things. Imagine Google had a vennd address on their site during their venture capital funding rounds. Go to the website, like the idea, buy equity by sending some coins their way.
By decentralising finance in this way a whole world of possibilities arise, fund a house purchase, a car loan, sell equity in a startup, lend friends money. All these options are easily achieved with a little thought and preparation. It may seem complicated at the moment, but considering the blistering pace of development in the industry, it wont be challenging for long.
Ben Ferris has a keen interest in financial markets, new and old. Participates in FOREX and is invested in BTC. Constructive comments are always appreciated.