The battle between blockchains has long been a mainstay of the digital currency community. Friendly competition between projects keeps the creative fires burning, and will hopefully ensure innovation for many years to come. The most recognizable rivalry at the moment is the one between Bitcoin and Ethereum.
Bitcoin being the old favorite, with its robust blockchain and security features; Ethereum offering a turing complete smart contract language, faster confirmation times, and a variety of other bells and whistles.
Ethereum one-ups Bitcoin by many accounts. There is however a second part to this matchup which has often been underplayed. A secondary layer, built on top of the Bitcoin blockchain, known as CounterParty.
What is CounterParty?
CounterParty is a token creation platform built on top of the existing Bitcoin blockchain. Tokens are created by “writing in the margins” of Bitcoin transactions, which can be read by counterparty wallets and applications. For some potential creators, Ethereum may require an engineers understanding to be useful. Alternately, Counterparty tokens can be created and used by anyone, within the amount of time it takes for a normal Bitcoin transaction to be confirmed.
To create a token to be used on the Counterparty platform, a user simply purchases some of Counterparty’s native currency (XCP). Then, they locate the token creation area within any compatible wallet of their choice. They choose a name for the token, the amount to mint, and whether the token amount should be locked. Once a token is created, it can be sent or received by any existing Bitcoin address (though only addresses viewed via a counterparty wallet will be able to see, and correctly utilize, the tokens).
Counterparty vs Ethereum
There are many differences between the two platforms. Ethereum is far better known, with many being unaware of CounterParty or its additive feature-set. Ethereum has its own blockchain, Counterparty lives on top of Bitcoins. This means that, for the most part, CounterParty’s transactions have the same limitations as Bitcoin’s. Where an Ethereum transaction takes roughly 17 seconds to complete, CounterParty is restricted to Bitcoin’s 10 minute block times.
The main difference between the two platforms stems from their ability to create and execute Smart Contracts. Ethereum’s core feature is that it can be used to secure and democratize (almost) anything a developer can dream of. Until recently, Counterparty could implement only basic smart contracts, executable only by their communities Core Developers.
This changed earlier this year, when the CounterParty team successfully ported Ethereum to the XCP platform using an EVM, or Ethereum Virtual Machine. What CounterParty has effectively done is give Bitcoin the ability to execute any of Ethereum’s features, with the same efficiency, but utilizing the notably more secure Bitcoin blockchain.
The competition between these two open source projects is notably an amicable one, with Counterparty noting that their virtual machine was implemented with Ethereum’s blessing. Developers on Ethereum have noted that, though CounterParty does increase Bitcoins functionality by adding most of Ethereums current features, that this may not remain the case as their platform continues to be developed.
Though understated, their rivalry will continue to push these respective technologies forward, to the benefit of the digital currency space as a whole.