Analysis: Counterparty Fork coming for BCH
The upcoming fork of the Counterparty Protocol will focus exclusively on the Bitcoin Cash (BCH) network. This new protocol aims to bring their new so-called XCPC to launch on March 1, 2018. However, there seem to be many roadblocks in their way.
Proof of Burn
The proof-of-burn process entails the burning of a certain amount of the currency from the period in which these tokens were first created in January 2014. The way in which tokens are burned is by having them sent to an unspendable address.
To understand proof-of-burn, let’s revisit our usual proof-of-work method. For example, Bitcoin is based on PoW (proof-of-work) which requires miners to carry out complex mathematical computations to earn bitcoins and secure the network. The PoW here entails electricity and infrastructure costs as well as the money value of time.
Proof-of-burn is a much more environmentally friendly way to bootstrap a new cryptocurrency from an already existing cryptocurrency. The tokens which hold value when sent to unspendable address become unusable, ensuring the stakeholders have to bear a cost to get the new currency.
A similar burning process would follow the launch of XCPC tokens.
Counterparty & Bitcoin
Counterparty Protocol provides a platform to make different asset types such as loyalty rewards, collectible cards and bond notes that will be backed by the security integrated into the Bitcoin blockchain.
Counterparty also allows the creation of digital agreements (smart contracts) on Bitcoin, and it extends this network with proof-of-publication, oracle betting, decentralized exchange, automatic and escrow. It brings Ethereum like functionality to the digital currency.
As of January 18, 2018, XCP trades at around $56.25.
The website was down on 14th and 15th January 2018 but seems to have reappeared in the time since publication. Still, the functionality of the site appears to be very limited with basic links like ‘About Us,’ not working.
XCP holders have flooded the Counterparty.cash forum asking to grant 1:1 ratio XCPC coins to current XCP holders, similarly like BCH were awarded to BTC holders.
A user on that forum commented “XCP holders totally deserve XCPC coins, after all, you guys are using the ‘counterparty’ brand name,” which is legitimate considering since other forks like Monaparty & Dogeparty didn’t use the Counterparty name.
Counterparty.cash could lead to more interesting use cases of BCH; however, in the last four years of its relationship with BTC, it has failed to go nearly as far as the legacy chain.
It was reported earlier that Counterparty was facing issues because of the ever growing fees of BTC transactions and thus it could find success on the BCH chain where fees are significantly less.The supposed fork is expected to enable similar functionality for Bitcoin Cash as well.