12 Myths about Counterparty XCP

Here are twelve myths about Counterparty that weve encountered, and our
responses to them. We hope this will clear up any confusion in the community. If
you have any other questions, please post in our forums or the Bitcointalk thread.

Myth 1: Counterparty is just Bitcoin 2.0 marketing hype.

Actually, the exact opposite is true. Counterparty started with a fully working reference client
(counterpartyd) on Github before any marketing efforts were made whatsoever. The
Counterparty team has many years of combined experience, and firmly believes in
demonstrating functionality first.

Myth 2: Counterpartys internal currency, XCP, is just another alt-coin.

XCP is not an alternative to Bitcoin. It is intended to enhance the feature-set of Bitcoin, not
replace it. In fact, all Bitcoin addresses are XCP addresses and vice-versa. Another mutual benefit
is that many features of Counterparty can be used with Bitcoin directly. The reason for creating
XCP is simple, some additional functionality is not possible without the use of an
escrow-enabled currency such as XCP.

Myth 3: Counterparty is just another project where the developers want to get rich
quick. They will just run away with the money.

The Counterparty developers never had a fundraiser, and did not sell XCP directly. Counterparty
has relied on its community from the beginning. Even the launch of XCP reflects this. Everyone
had an equal opportunity to invest their Bitcoins into the protocol during the proof-of-burn
process. During the launch, users were able to send BTC to a provably unspendable address in
exchange for XCP. These BTC are not owned by anyone and can never be spent.



Myth 4: Counterparty development is dead and nothing works yet.

Counterparty has a fully developed decentralized asset and exchange system, with feed-based
betting and fully trustless betting functionality. All of this works today. There are several other
features, so we suggest you take a look yourself: http://counterwallet.co.

Also, development is very much alive and progressing steadily:
https://github.com/CounterpartyXCP

To ensure the safety and integrity of our platform, Counterparty has already had two
comprehensive formal audits by security researchers Sergio Lerner and Peter Todd.

Myth 5: Counterwallet stores your passphrase and private keys on their servers!

Having to trust a centralized website with your login information is strictly against the
Counterparty philosophy. This is why Counterwallet is designed to use client-side encryption in
your browser. This means that your passphrase is never sent to any external servers. All
addresses are generated directly from the passphrases themselves, without the need for any
centralized entity.

Myth 6: A developer, a hacker, or someone else could delete my asset from the
Counterparty exchange.

Counterparty assets are securely stored on the Bitcoin blockchain and cannot be deleted.
Because it is impossible to retrieve lost assets, it is important to keep your Counterwallet
passphrase and address private keys safe.

Myth 7: If Bitcoin can be used in Counterparty, then XCP doesnt have value.

There are significant reasons why XCP has value aside from speculative investment:

Trading with XCP on the distributed exchange is (and always will be) cheaper and faster
than with BTC.

XCP is the native (fixed-supply and slightly deflationary) currency of Counterparty and its
sole first-class citizen. If the Counterparty protocol has great value, then so does XCP.

You can only use XCP for making bets, CFDs and asset callbacks. Upcoming complex
features and other financial instruments will also likely only be possible with XCP.

All future proof-of-stake voting, e.g. for protocol changes, voting functionality, DACs,
etc. will be determined by XCP holdings.

Myth 8: I want to create a poll on the Blockchain, but Counterparty doesnt have a
voting feature.

Counterparty supports voting through user-created assets. If you create an asset (EXAMPLE),
you can create any other asset (such as EXAMPLEVOTE) and pay distributions of EXAMPLEVOTE
to all holders of EXAMPLE automatically.

To send available votes to the holders of your asset, go to Counterwallet and click on your
asset EXAMPLE, and then click pay distribution. Choose EXAMPLEVOTE as the currency to
distribute. This way, all holders of EXAMPLE will receive EXAMPLEVOTE in the amount you
specify.

Now all you need are as many different XCP addresses as there are choices in your poll. To cast
their votes, holders of EXAMPLE can then send the EXAMPLEVOTE they have received to
whichever choice(s) they agree with. The results of the poll will be public and verifiable thanks to
the Bitcoin blockchain.

Myth 9: You cant store XCP or assets in cold storage. There is no 2FA!

You can create any cold storage BTC address and send XCP and user-created assets to it. Then
you can redeem them by using the sweep address feature in Counterwallet. Your XCP will be
secure as long your BTC private key is safe. Multi-sig has been implemented on test-net, and will
soon reach the mainnet. Please see Myth #11.

Myth 10: Counterparty is polluting the Bitcoin blockchain with useless data and
weighing down the network. This is a free ride on top of Satoshis hard work!

This seems to be a very persistent myth. However there is a rather simple explanation for why it
is a non-issue:

Counterparty uses Bitcoin transactions to create its features. These transactions pay
miners fees like everyone else.

The value of the added features (such as decentralized trading and betting) far exceeds
the ever so negligible cost of data storage in the Blockchain. Betting and trading without
a middle-man or trusting the other party is not possible with fiat currency, and we
believe this provides Bitcoin with another competitive advantage.

When XCP was launched, users made 2100 of their BTCs unspendable to establish the its
backing. This increased the scarcity of Bitcoin, thereby contributing to its value.

Counterparty is as decentralized as Bitcoin, and aims to provide as many BTC-enabled
features as possible.

Counterparty has many different methods of encoding data into the blockchain, and
preventing this data from being stored is close to impossible. Saying that Bitcoin
developers can kill Counterparty in this manner, is quite frankly, FUD.

There is another reason why this issue cannot reach a critical stage. This process of
bloat is self-regulating. If everyone uses Counterparty, then it embodies the value of
its features. If nobody uses it, the data storage requirement will be non-existent.

Myth 11: Counterparty is missing multi-sig support.

Multi-sig has been implemented on test-net, and will soon be added to the main net. This will
allow people to split up access to an address through several private keys. This means that
2-of-3, or 3-of-3 keys will have to be used in order to process an action on that address. This
way, several users will have to agree on any actions to be taken.

Myth 12: Broadcast feed betting is centralized.

Although it is true that broadcast betting relies on the feed operator to resolve the bet, your
XCP funds are escrowed on the Blockchain and never directly in the control of the feed
operator. This already provides a great advantage over existing systems, which cannot provide
verifiable transparency or built-in automatic escrow. Additionally, it will soon be possible to
create broadcast addresses which will require the agreement of several users to be published
(multi-sig).

Proof-of-stake voting and other solutions are being considered for future development.

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