What is XCP?
So you just heard about Counterparty, and now you're wondering what's up with its token? In this video, I discuss what XCP, the Counterparty token, is good for ...
What's up party people? Chris DeRose here, Community Director of the Counterparty Foundation and in this video, I want to address the question, "What is XCP?" So XCP at first, at least would be, the token of Counterparty. I think a lot of people, certainly understand it to be valuable in a Counterparty community. But it's a little bit murky in terms of what it's actually used for. Very few of the features in Counterparty actually require XCP in order to run. Certainly, you cannot use XCP for transmitting assets. You cannot use XCP for participating on the decks.
You cannot use XCP for performing bets. So those are the base functionality. And I see people sometimes even criticize Counterparty for needing XCP, whereas maybe like Color Coins doesn't. But, that's not true, because all the things that colored coins does, say that doesn't require a currency is also done by Counterparty, without requiring a currency. Now, for the extra features that things like Color Coins doesn't provide, we do end up needing some XCP. Certainly, first and foremost, smart contracts.
We need some notion of gas in order to throttle the spam, which will throttle the execution time, so smart contracts. We can't use BTC for that easily, mostly because the money supply is a little bit difficult to understand. But, certainly, XCP is very useful for that. It's important to note too, that though there is a limited number of XCP, that the calculations upon which gas is made available from XCP are itself related to the size of the money supply, so would never run out. But in addition to that, XCP is performing spam control on the actual definition of assets. So if you go to create your own assets, say gold or dollar or some such thing, you need to sacrifice some amount of XCP in order to do that.
And that XCP is burnt, it is relinquished back to the community in form of its destruction. Then there is another use for XCP. There's been some indications on other things we may end up using XCP for. I think Adam has some ideas in his head, but he's still working through. One of the things might be voting shares, in terms of if you have an X% of the money supply in your holdings, maybe that would enable you to have X% of an opinion on the Counterparty Foundation. That is one discuss feature, it's not ratified.
And in the past, I think we've used XCP for a couple of other minor things, relating to escrowing value. So some of the earlier, like rock-paper-scissors games and stuff like that, were using XCP for those terms. And another reason that XCP has come to be, and one of the reasons we even needed Counterparty is that BTC can't be held in escrow. So that is a feature of the protocol, and in the same way that we have the ability to escrow payments as a feature of Counterparty. So these are other features of XCP that have come to be over the years. Well, that's the bulk of it, that's what XCP does right now.
XCP is a very interesting thing, and I would definitely tell you to hold some if you think you're going to make smart contracts, or if you're just thinking the project is heading the right direction. But it's actually not necessary, and it may end up being not that important for the vast majority of Counterparty transactions. It's worth noting that the number one protocol, or the number one token of value in Counterparty is Bitcoin. It is primarily Bitcoin. Bitcoin is what everything does require, and Bitcoin is what Counterparty basically is. It's just that we are an extension to that.
That's it. If you like this video, subscribe to the channel. If you have more questions, I always love to hear from you. You can tweet them to me on Twitter @derosetech or you can email me Chris@ChrisDeRose.com Later party people.