Counterparty – Money to Burn
Unless you’ve been hiding in a cave, or under a rock (or whatever other cliche’ object you can think of), you’ve probably been hearing a lot about Bitcoin in 2014. The crypto-currency has been around since 2008, and in 2013 it took a huge dive and made a lot of people rich. This is no funny money… Don’t believe me? On Friday, Dell became the largest computer retailer to accept it. Its 2013 low was $13.50. Today it trades at $630 a coin. Compare this figure to Google; its assets trade for just under $600 this morning. What about Apple? They’re not entirely relevant since they are trading at $95 after a stock split. Though before the split, shares of Apple were trading for roughly this figure. But this article isn’t about Bitcoin — at least not directly. It’s about the assets that ride the extra bits on the Bitcoin blockchain. Counterparty.
Counterparty fancies themselves as a sort of “Bitcoin 2.0″. It works by exploiting a layer of the Bitcoin blockchain so that content creators can create an inclusive token, best used within its respective community. When you control a Counterparty asset, you can reward community members with it. An example of its inclusiveness can be found at Tatiana Coin. Unlike a true Bitcoin, it’s essentially funny-money. That is, unless you’re Adam B. Levine.
Levine created his own Counterparty asset, called LTBCoin. It’s used within its namesake, the Let’s Talk Bitcoin network. If you’re a member of the Let’s Talk Bitcoin community, LTBcoins are distributed to you on a weekly basis. LTBcoins will be distributed for 5 years, at which point no more will be issued. If you want to learn about the controlled distribution of LTBcoins, the white paper is freely available for you to read.
If you really want to get a good grasp on Counterparty and LTBcoin, skip the white paper and listen to the latest episode of Bitcoins & Gravy.
Unlike a Tatiana Coin, LTBCoin already has a real-world value associated with it. Melotic, a crypto-currency ticker and market tool, lists LTBcoin along with its real value in BTC (Bitcoin). I know, it’s a bit paradoxical for LTB to have a BTC value when it already exists on the blockchain, but it does.
Cult of Personality
Has Adam Levine created a cult of personality within his community? Maybe. I certainly don’t mean to say he’s anything like Saddam Hussein, Joseph Stalin, Steve Jobs or Hitler, but the basic ingredients are definitely there. I use the term ‘cult of personality‘ loosely, of course, and what I mean to convey is that he’s got all of these brass rings and lots of people are (and will be) reaching out to grab them in the hopes that they will be rewarded with something they can legitimately profit from. At the same time, he doesn’t make any unrealistic promises. If Levine can manage to create real value out of his stake in the counterparty protocol, I’d call this nothing short of revolutionary. Creating value out of assets that can be designed for novelty purposes on a whim is the work of a true technologist and entrepreneur.
I got into Bitcoin and Crypto-currency about 8 days ago, so to say that I’m a newb would be an understatement! I’ve tried to devour as much content as I can on the subject, reading endless blog posts, Wikipedia pages. etc. I’m also quite a bit into “Mastering Bitcoin” from O’Reilly. I’ve got a long way to go for sure, but from what I’ve already learned, I’ve been able to form a few opinions about Bitcoin and Counterparty. Counterparty is innovative and unique, but it operates by doing something that concerns me. Counterparty is allowed to exist because of 2100 Bitcoins that were destroyed using what’s called “proof of burn”. These Bitcoins will never be used again as Bitcoins. Let’s say 10 different organizations wanted to make their own version of Counterparty using the “proof of burn” method. Let’s say these organizations wanted to burn more Bitcoin for their protocol. Let’s say 20,000 BTC. In the beginning, this would drive the cost of Bitcoin up (presumably) because they would become more scarce. But if Bitcoins can be so easily rendered useless, what’s to stop these business ideas from destroying Bitcoin? What if Bitcoin just becomes a delivery mechanism for different types of Counterparty assets? Would that curb the mining effort and devalue Bitcoin to nothing, or would Counterparty and others continue on a dead blockchain out-valuing it?
Let us know what you think in the comments.