counterparty

What You Need to Know About Counterparty Wallet

Counterparty is a layer on top of Bitcoin blockchain, and it extends the functionality of Bitcoin. Counterparty works by encoding data into Bitcoin transactions. Thus, it will have the strong security of Bitcoin and provides additional features.

Counterparty facilitates the creation of custom tokens, escrows, etc. So, Anyone can conduct Initial Coin Offerings with Counterparty.

Whenever one needs to transfer these tokens, a small Bitcoin transaction—with sufficient fees so that miners will accept—would be created by embedding the relevant data into a Bitcoin transaction.

The Bitcoin transaction would go through normally. And a counterparty node will connect to the network and will download the transaction from the Bitcoin blockchain. And these nodes will decode the embedded data from the Bitcoin transactions.

So, a Counterparty address is just a Bitcoin address. Any token created on Counterparty can be sent to any Bitcoin address.

Counterparty Coin (XCP)

The platform has a native cryptocurrency called Counterparty Coin (XCP). It has a current supply of 2.6 million coins.

Counterparty Wallets

Counterparty ecosystem is accessible through its wallets. One such wallet is Counterwallet. It is a web wallet and comes with all the functionalities of Counterparty reference client implementation. And any encryption and decryption happen on your computer. No keys are stored on a server and, neither they reach any servers, which is good security.

There are many different Counterparty wallets available. You can learn about them better on the official website.

If you want to cold store XCP, you can use the Bitcoin paper wallet. Afterward, If you're going to use the XCP, you can sweep them to a Counterparty wallet.

Conclusion

Counterparty makes good use of Bitcoin blockchain and its security. But every time a transaction has to be made on Counterparty, a Bitcoin transaction must be initiated. Nevertheless, Bitcoin is yet to solve its scalability problem. Until then, Counterparty might not get excellent traction.

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2 Comments

  1. The base currency of Counterparty is XCP not XCR

    • you are right J-Dog, fixed.

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