Counterparty Is Pioneering Bitcoin 2.0

In a recent press release on the 4th October 2014. Counterparty revealed it is powering over two-thirds of all Bitcoin and alt-coin 2.0 startups and “ICOs” (Initial Coin Offerings). Entrepreneurs are flocking to the Counterparty platform for the free, open and secure peer-to-peer financial markets accompanied by some interesting financial instruments.

• Create a coin (token) for promoting your brand or performing a crowd-sale. Easily distribute profits or interest to your users and partners.
• Trade your own token, as well as bitcoins or XCP with your peers, safely and easily. Counterparty matches and completes your trades automatically.
• Easily speculate on the outcome of future events and hedge against price movements of currencies, commodities, and virtually anything else.

The three founding members of Counterparty joined forces in late 2013. Evan Wagner reached out to Robby Dermody and introduced Adam Krellenstein. With their mutual interest in the disruptive qualities of Bitcoin 2.0, they came to the conclusion that the world’s financial markets could benefit heavily from decentralization. The decision was made to build a solution. Krellenstein began work on a reference client known as Counterpartyd and the foundations for Counterparty were laid.

Instead of creating their own blockchain, Counterparty layered their reference client on top of the Bitcoin protocol. This gave Counterparty time to focus on further development of their products. They were working smarter and not harder. On 2nd January 2014 they were ready to go with their free, fully functional reference client, intended to create and support a flourishing and productive economy.

Counterparty demonstrated their platform, with a “Proof is in the Pudding” approach, allowing potential investors to experience the product. Its potential could be seen right away. Counterparty had replaced centralized control with decentralized power. The use of mathematics and cryptography to overcome third-party risks, such as greed and selfish manipulation, had great appeal.

The belief in Counterparty was reflected in the 2124 Bitcoin’s that were ‘destroyed’ in the revolutionary ‘Proof of Burn’. This process consisted of Bitcoins being sent to an address for which a private key did not exist. This act sent a ripple around the Bitcoin community. Counterparty became known as ‘The People Who Burn Bitcoins’. However, their approach was something of magic. The Bitcoins sent to the burn address were given a new lease of life, transforming them into XCP (the native currency to Counterparty), the fuel that powers the Counterparty platform. Counterpartyd took the role of an accountant and distributed the XCP to the relevant wallets.

All transactions past and present are embedded in the Bitcoin blockchain. As Counterparty grows in popularity, one has to wonder about the future of Bitcoin in relation to the success of this peer-to-peer financial market. Dermody explains,

“Let’s imagine five years in the future and Bitcoin is no longer the king coin, one big advantage of Counterparty is that we can essentially move to another blockchain in the future.”

The migration of their entire network to another blockchain would take no more than a weekend and future proofs the Counterparty platform.

This is exciting news for fledgling businesses.  In the past, these great features have been cost prohibitive or inaccessible. Now a start-up with a novel idea can use any of Counterparty’s financial tools to support their development, with a guarantee they will always have access to the best technology available. Counterparty has attracted a diverse array of projects, for example:

• Storj: Provides decentralized and secure cloud storage and also allows for users to rent out their additional hard-drive space using DriveShare. On Counterparty News, Shawn Wilkinson, lead developer of Storj, is quoted “Counterparty and Counterwallet, upon much research, was found to be the most feature complete and stable platform. We are happy to be working with Counterparty to decentralize and grow the Storj platform.”
• Permacredits: Aims to fund the global permaculture movement’s goal, “To create sustainable economic ecosystems that respect and nurtures the environment”. In a Bitcoin Magazine article Are Permacredits the Future of Sustainable Living? Xavier Hawk founder of Permacredits states, “We are currently using the Counterparty platform to issue and store credits. Their GUI is extraordinary and the developers there are excellent.”
• Swarm: An open source project bringing true crowdfunding to the world. Joel Dietz founder of Swarm states on Counterparty News, “The moment I saw the user-created assets on Counterparty a light bulb came on in my head — this is the future of crowdfunding.”

The striking diversity of projects jumping on board sets the precedent for the future. Anyone with a great idea can become a part of this new movement.

“We want to unlock the potential of “Bitcoin 2.0″ for thousands of people, who will then create profitable businesses, as well use the technology to further the social good.”
—  – Counterparty

With the passion of the founding partners from the get go, it can be assumed that Counterparty will continue to be a hot bed of activity. Their fistful of attractive features, and the Bitcoin community’s obvious interest, they are the ‘go to’ in a niche environment.  Beginning with a desire to free up the world markets from centralized control has resulted in global opportunity for businesses to blossom in this grassroots movement. It goes to show this really is an exciting time we live in, a time when an idea has more than just potential.

B.Holmes, author of The Range of Illusion and The Private Key instalments, is currently located in Thailand, researching and writing about crypto. You can follow B.Holmes on twitter @BanteringB, or contact via email: [email protected]