Counterparty sparked debate in the bitcoin community yesterday when it announced it had successfully ported open-source software from the Ethereum project to its platform, equipping it with new functionality.
The decentralized peer-to-peer exchange provider framed the announcement as one that would soon bring all the potential of Ethereum's as-yet-unlaunched smart contract system to its platform, while providing the added security of the bitcoin blockchain and its established global mining network.
chief architect Adam Krellenstein indicated the move aimed to satisfy widespread demand for a viable smart contract platform, while appealing to those skeptical that such a system requires a new blockchain with an untested mining network or a new native token.
He told CoinDesk:
"I think they're all very excited for a smart contract platform and people are rightfully skeptical that you need a new blockchain and a new coin and we're arguing that you don't," he added.
By contrast, Ethereum CCO Stephan Tual sought to downplay Counterparty's statements that its platform would now provide similar functionality as its offering as premature.
"This shows a continued lack of understanding by other platforms (XCP, Blockstream) of what Ethereum actually is and aims to achieve," he said, before reiterating Ethereum's stance that it is a web 3.0 platform.
Though its technology has yet to meet the market, Ethereum has also garnered enthusiasm in the bitcoin community, raising $15m–$18m through a crowdsale of its native token, ether.
Launched in January, Counterparty quickly gained momentum in the market, with two of its developers notably joining Overstock's planned decentralized stock exchange project, Medici.
Counterparty has a live testnet of its Ethereum smart contract system available today, and hopes to make the full version public ahead of Ethereum's planned launch next spring.
Unlocking new potential
Throughout the interview, Krellenstein asserted that Ethereum is both a smart contract system and a new blockchain. However, these two systems can work independently of one another – as evidenced by Counterparty's latest move.
As such, he framed Counterparty's decision to implement Ethereum's smart contract system as one that would provide the wider crypto-development community with more choices should they seek to utilize this functionality for new projects.
Counterparty already features assets, digital tokens and derivatives, among other offerings. Now, according to Krellenstein, users will be able to create everything from family trusts to the decentralized applications Ethereum is currently building on Counterparty.
"Because this is Turing complete you'll be able to do anything on it," he said. "You'll be able to add namecoin in a couple lines. You can run the Counterparty client, write the namecoin code, you publish it and then anyone can use that namecoin functionality on the bitcoin blockchain with zero security issues."
As for whether the launch was collaborative, Krellenstein said that he had previously spoken with Ethereum founder Vitalik Buterin about Counterparty porting Ethereum's code.
"It was independent but with their blessing," Krellenstein said, adding:
Though Ethereum released public statements on the matter, it contained most of its public response on Reddit, where co-founders Vitalik Buterin and Joseph Lubin shared their thoughts with the community.
Buterin framed the integration as a validation of the Ethereum project and its ideas, many of which he said were not initially taken seriously by the wider bitcoin community.
"Quoth one of our team members," Buterin wrote, "it went from 'Ethereum is not possible' to 'sidechains will kill Ethereum' to 'we copied Ethereum'."
The developer went on to suggest that ultimately Ethereum will provide a more compelling smart contract solution should it succeed at reducing block times to 12 seconds, a figure it has suggested the project will strive to achieve.
Further, he emphasized that all competition between projects should be looked at in terms of how their results could realize the blockchain's true innovations.
Elsewhere, Ethereum community members pointed to the problems Ethereum's blockchain is designed to avoid, including bloating the bitcoin blockchain.
Though amicable, both sides used the event to air differences between their platforms with sometimes pointed remarks. For example, Lubin compared Counterparty's approach to running Netflix on an email protocol.
"You could maybe do it, but why would you want to? And certainly the user experience would be awful," he said.
Enabling developer choice
Bitcoin developer Peter Todd, who has previously worked on Counterparty and Mastercoin alongside his own development solution, treechains, said the news doesn't position one project above the other.
Rather, he said, developers who want to enable smart contracts simply get to select from a set of pros and cons before choosing to work with Counterparty or Ethereum.
"It becomes a set of trade offs for security and cost," he added. "Embedding stuff on the bitcoin blockchain can be more expensive because of the transaction fees. Also you need to run, at least currently, a full Counterparty node. But that's a set of trade-offs for some very good security, as you get all the transactions exchanged on the bitcoin blockchain."
Daniel Peled, the lead developer at Gems, a social messaging service running on top of the Counterparty protocol, said he believes it is too early to say what the long-term implications of Counterparty's move would be.
Peled said this is simply the latest news event that has showcased the debate of whether its better for developers to build on top of bitcoin or another new blockchain.
"Most people who like Ethereum are comfortable with it being on a new blockchain," he said. "That is the whole point, to solve [bitcoin's] slow confirmation block time and high fees that make it difficult for smart contracts and some appcoin models."
Mastercoin CTO Craig Sellars struck a more optimistic tone, adding:
Correction: A previous version of this article stated that Counterparty had yet to release any code for its testnet. The code can be found here.
Images via Counterparty; Shutterstock
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