Nobody needs Counterparty - a discussion on needs and wants

About a month ago, I had a comment exchange on /r/Bitcoin with /u/brighton36, the community director of Counterparty. A lot of different points were discussed, but the general argument was that /u/brighton36 believed that there isn't a convincing argument for the use of smart contracts and turing complete language in general, thus making Ethereum an unnecessary project. However, just like that logic could be used to claim "nobody needs Ethereum", similar logic could be used to make a statement that "nobody needs Counterparty". Lets explore whether any of this holds water...

Nobody needs Counterparty

Counterparty was launched around the start of 2014 and is one of the Crypto 2.0 platforms that runs on top of Bitcoin. Their notable feature that sets them apart from most other Crypto 2.0 platforms is their reliance of Proof-of-Burn to issue their currency. The platform offers decentralized exchange between XCP, BTC, and user created assets, although no direct asset-asset exchange, as well as some financial contracts. Their most notable and active assets include LTBCoin, Gemz and BitCrystals, which seem rather negligible in comparison to other platforms.

All in all, Counterparty is a decentralized asset issuing platform for centralized assets - loyalty points, presale currencies, etc. Since it relies on the Bitcoin network, the transactions are slower than the competition, there are no real gateways on the network offering fiat currencies. The network doesn't support asset-asset trading, making it pretty useless for direct FX trading. While Counterparty tried to woo Overstock into using its platform, but that didn't work out too well. The most notable proponent of Counterparty appears to be Adam Levine with his Tokenly project, but hearing what he aims to accomplish with it during a Decentral Vancouver meetup, both myself and other listeners said "you're reinventing Ripple!".

So in general, nobody needs Counterparty - you can issue the same currencies on faster, more established platforms, you can issue them privately on a centralized platform, on semi-centralized Open Assets, partner with some exchanges, etc. There are many other, better ways you can accomplish the same result without using Counterparty. So all in all, you don't need Counterparty, right?

Nobody needs Ethereum

In similar vein, one could criticise Ethereum's smart contracts. They offer unambiguous code execution, you know the code will not be changed during execution, and you can run long-running pieces of software that can use persistent storage on the blockchain. As /u/brighton36 pointed out:

"Unambiguous code execution is already in ubiquitous use today. Package management systems use code signing to detect whether the code being executed is asserted as valid by the issuing party. Open source scripts are in abundance. "

Beyond that, Counterparty has recreated Ethereum on its platform (and Ethereum responded in kind by recreating Counterparty in 340 lines of code). So all in all, you don't need Ethereum, right?

It's not about the need, but the want

When you think about it really, focusing on whether you need something or not because you can accomplish the same task with something else is a silly argument. That's like saying "you don't need Goland, you've got C++", or "nobody needs a screw, you can use nails". So no, nobody needs Counterparty and nobody needs Ethereum, but they are both useful tools in their own right. As long as they are functioning as intended and fulfil a need people have, not necessarily optimally, they are useful. I might prefer to use Ethereum to say, publish my blog because I can / feel like it / it's cool to do that, or Counterparty to issue my local currency because it's convenient / good enough / I like the project. Sure, you can do better in both cases, and in time you might optimize and choose a better platform, but that doesn't mean those projects aren't useful in one way or the other.

The only obvious caveat here are pumps, scams and similar attempts at getting people's money illicitly. While PayCoin might be as useful to transfer money as Tether, it wouldn't be advisable to give money to the former over the latter.

Good projects can flourish if people want to use them, or die if people don't care. Bad projects will most likely burn themselves out eventually. If Ethereum, Counterparty or whatever other project is out there is used by people, even if you can accomplish the same things with something else, let them use it. Claiming a project is "full retard" won't get you very far.


Claiming that "nobody needs project X" because you can accomplish the same task with some other tool or technology doesn't make the project itself useless. People might have many reasons to use the various alternatives, and as long as you can accomplish what you set out to do, that might be good enough for a lot of people.


- It looks like Counterparty has started supporting asset-asset exchange since the last time http://tiny.cc/Crypto was updated.
- As some have pointed out, Counterparty is also used by Storj and Spells of Genesis trading cards, although they haven't been trading much recently, hence why they weren't mentioned

More discussion on the topic can be found here:

1 comment:

  1. This article is silly in a bunch of ways. But rather than write a long winded reply, I can sum up the principle reason this is a dumb response: Counterparty's mining is performed by bitcoin miners.

    Piachu seems to believe burning energy is a benevolent process, and people will mine because they want to be different. Counterparty believes mining is a scarce and expensive resource, for which people will only burn energy if they have to.

    Since Counterparty relies on Bitcoin, and bitcoin is a technology for whom energy is burned because of actual need (ie they're underserved), counterparty doesn't have to deal with need-based issues of Ethereum(who doesnt serve the underserved).

    It's not complicated, and it's not a long-winded explanation of user preferences to "think different". It's simple economics that piachu continually fails to grasp because he thinks blockchains are a computer science innovation and not an economic innovation.