Counterparty AMA Top 10 Q&As
By Alberto Mata
On Monday, November 17th, Counterparty founders Robby Dermody, Adam Krellenstein, and Evan Wagner hosted an ask-me-anything, or AMA on the Bitcoin subreddit.
Counterparty extends Bitcoin’s functionality from a peer-to-peer payment network into a full-fledged peer-to-peer financial platform. Counterparty enables creating, sending, and selling your own token, issue dividends, utilizing binary options and contracts for difference, and writing and running your own Ethereum-style smart contracts directly on Bitcoin to do virtually anything.
Founders Robby Dermody and Evan Wagner joined forces with Overstock to focus on building Medici, the world’s first SEC-regulated stock market for cryptosecurities. On October 5th at Inside Bitcoins Las Vegas, Overstock CEO Patrick Bryne made the official announcement.
On November 12, Counterparty announced that it successfully ported Ethereum’s entire smart contracts platform. Users are allowed to write Turing Complete smart contracts into the Bitcoin blockchain and execute those contracts in a completely decentralized and trustless manner.
Here are some of the top AMA Q&As:
1.) Elevator Pitch
Q:
“In an elevator pitch to someone new to this what is the problem Counterparty is trying to solve that bitcoin doesn’t?”
-5tu
A:
“What Counterparty does is it extends the functionality of Bitcoin beyond that of a mere payment protocol, and into the much larger realm of general peer-to-peer finance, trade, and smart contracts.”
-Adam Krellenstein – PhantomPhreakXCP
2.) Medici
Q:
“Any hints you guys can give on the development process of “Medici” or what we could expect to come from this innovation once it’s officially released? Really just anything concerning “Medici” would be awesome to hear. Thanks for creating such an incredible platform for open source finance!”
-blastoff117
A:
“We have to remain rather tight lipped around Medici, but we would like to have the readers consider that the size of the stock market is estimated as $55 trillion, and the bond market size is estimated at nearly $100 trillion. Not only we, but several individuals we know (who are involved very deeply with the financial industry in large firms at executive levels) feel that in the near future, most, if not all financial instruments like stocks and bonds will be traded on a blockchain of some sort. Just let that sink in… That is the potential here!”
-Robby Dermody – xnovaxcp
3.) Ethereum
Q:
“Is there some simple article that explain Counterparty ethereum script system? And comment it thoughtful?
In particular I want to understand why this system can’t be implemented also on colored coin or other system, for free: without the need to buy XCP, of pay XCP fees.”
-rodomonte11
A:
“The Counterparty smart contracts system is really the same thing as the Ethereum one: an infinitely powerful programming language for writing decentralized applications of any kind. Moreover, they’re designed to be nearly 100% compatible, so that any code you write for one platform will be immediately executable on the other.
Colored coins simply isn’t a powerful-enough protocol to implement a smart contracts system. To quote Peter Todd:
There’s a lot of stuff that’s better done with the much simpler colored coin technology, but equally, there’s a lot of stuff colored coins just can’t do for technical reasons. In short, if you want to play around with Ethereum-style smart contracts in a decentralized system, you need a token of value like XCP.”
-Adam Krellenstein – PhantomPhreakXCP
4.) Security
Q:
“Gavin Andresen said that Ethereum is “playing whack-a-mole with security and DoS vulnerabilities”. Isn’t there a risk that a badly written smart contract can crash the nodes, i.e. the entire Counterparty network?”
-Norm77
A:
“I don’t want to speak on Gavin’s behalf, but I imagine that he was referring primarily to network security issues that Ethereum will have creating their own blockchain technology from scratch. Securing the smart contracts virtual machine is actually relatively easy to do (the whole thing is maybe 1000 lines of Python).”
-Adam Krellenstein – PhantomPhreakXCP
5.) Spam
Q:
“Even if the technology is secure, how do you plan on incentivizing users not to spam the network? A fee will work, but how to set it a decent level? If XCP goes up in price, the fee can become crippling high.”
-Norm77
A:
“There is a fee for absolutely every contract computation and storage operation, so SPAM won’t be possible. The exact fee amount will certainly change with the value of XCP, so that the cost of computation stays at the appropriate level, and computation remains reasonably priced. Thanks!”
-Adam Krellenstein – PhantomPhreakXCP
6.) Contract for Difference (CFDs)
Q:
“It is theoretically possible to build CFDs and emulate the BitShare’s BitAsset mechanism on Counterparty?”
-pietrod21
A:
“Yes, it’s definitely possible. With a Turing Complete smart contracts system, we can do anything that any cryptocurrency can!”
-Adam Krellenstein – PhantomPhreakXCP
7.) Sidechains
Q:
“Is there a way to keep Counterparty, but get rid of the altcoin? If Blockstream (sidechains) delivers, would you consider moving to a sidechain to have features like faster block times, 100% btc currency, etc..”
-Chakra_Scientist
A:
“XCP isn’t really an altcoin, as it’s not an alternative to BTC and BTC can be used directly within the Counterparty protocol for many things. However, much of Counterparty’s advanced functionality simply requires the existence of a new currency that is “aware” of the new features. This includes the new smart contract functionality, where XCP is used to fuel the execution of these contracts.
Sidechains are highly theoretical and still have major security concerns. However, if these problems can somehow be overcome, we’d certainly consider moving to a sidechain.”
-Adam Krellenstein – PhantomPhreakXCP
8.) Regulation
Q:
“How do you feel about the bit licence, and regulators in general? Have you been served papers?”
-_bc
A:
“We have not received any letters or notice from the SEC, the NY DFS, or any other regulatory agency. The Bitlicense (given the most recent clarifications) relates primarily to transmission and storage of digital currencies. Our views on the Bitlicense are similar to those articulated by Jeremy Allaire of Circle in his blog post in August. In short, we feel that some amount of regulation is a given, but regulators must understand that Blockchain technology is both young, inherently different than traditional financial tools, and something that can be extremely beneficial to society. Their regulatory approach should be balanced, nuanced, and take these factors into account.”
-Robby Dermody – xnovaxcp
9.) Decentralized DNS
Q:
“Can Counterparty assets be used as a decentralized DNS ala Namecoin?”
-Norm77
A:
“With the smart contract scripting language, Namecoin-like functionality can be implemented. Vitalik has written about this on several occasions.”
-Evan Wagner – cityglut1
10.) Future Hardware Wallet support
Q:
“When might we see Trezor support (or other hardware wallet) for Counterwallet?”
-E72521
A:
“The feature is planned. Feel free to add a bounty to it (which you can do right from the github issue page itself), and hopefully it will be picked up and implemented sooner.”
-Robby Dermody – xnovaxcp
Photo Source: Mikaley via Deviantart