Counterparty has announced that it has recreated Ethereum’s smart contract capabilities for the Bitcoin blockchain, which will allow future users to securely write their own contracts.
The project, in essence, brings together the strengths of each of the three technologies together to make up for each others’ deficiencies.
The announcement emphasizes the “preeminence” of Bitcoin and its blockchain as the “host chain” for consolidating all the features of the cryptocurrency world. Among cryptocurrencies, Bitcoin is by far the most secure, as reflected by its valuation. It commands 90% of the combined market cap of all cryptocurrencies. The several hundred alternative currencies and protocols, in contrast, have seen relatively little adoption and can be often be successfully attacked at a low cost.
However, Bitcoin on its own does not have smart contract capabilities.
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Counterparty is used to create smart contracts on this blockchain, but until now, these would have to be manually hard-coded by core developers each time.
That’s where Ethereum comes in. It “is a project to create a novel blockchain in addition to a programming language and virtual machine for the creation of smart contracts.” On its own, however, it would have to “reinvent the wheel” in creating its own blockchain. This would be risky and time consuming.
It makes more sense to build upon the solid foundation of Bitcoin’s robust blockchain. With the new Counterparty Contracts, users leverage Ethereum’s language to create their own contracts and have them executed on Counterparty nodes.
The project aligned Counterparty’s contract language with that of Ethereum, which also makes the system more secure. Also, every Bitcoin address is also a valid Counterparty address. Thus, according to the blog post, “this innovation will also be a great boon for Bitcoin, which will become a more complete ecosystem with its release.
The project is the likely cause behind the recent significant rise in Counterparty’s currency, XCP.