Why did we stop the Counterparty burn?
The Counterparty burn was a period from January to February of 2014, where the supply of XCP was created by destroying Bitcoin. But why did that period end?
What's up, party people? Chris DeRose here, Community Director of the Counterparty Foundation. And in today's video I wanted to answer the question, why isn't XCP continually burned? Why do we stop the Counterparty burn? Why didn't we just let it go on indefinitely? So, there's a couple of points to this. And for the people who don't know the background of what the burn was. The creation of XCP was done in the early part of 2014, early January to early February. It was a period, there was a window, where people could burn their bitcoin, and in exchange for having burned their bitcoin, they formed the genesis allocation of money on the Counterparty XCP money supply. If you burned one bitcoin, I forgot what the amount was, but then that address itself now held XCP.
The money was burned by sending that money to an unspendable address, it started with Counterparty or it started with burn or something like that or CP burn. And at that point the money was gone from the bitcoin supply. The money had been created in exchange in the Counterparty monetary supply and that process stopped, again in early February. What's important to know about this strategy is, that we fixed the size of the monetary supply. There will never be any more XCP. So, if we allowed XCP to be continually burned that would raise a number of problems.
Maybe those would be features, if you wanted them to be. But in the case of Counterparty we didn't. And if we continued the burn, then it would beg a couple questions. I guess, first off, if you continued the burn what would be the reward amount for having burn BTC now? Well I guess there would be some amount. We could create a minimum. That would create a price floor, on the XCP trading amounts.
Because you would not by from somebody if you know you could always burn it in exchange. So it would create more XCP into the system over time. Again not necessarily bad, but not what was wanted. I think it would have made it hard to really calculate a lot of the smart contract monetary supply calculations. When you execute a contract you need to burn some amount of gas, that gas is XCP. And if we allowed for BTC to continually burn it would have screwed with the ability to control the cost of executing smart contracts and also combating spam for asset declarations and things like that.
It could've continued that we would've continued burning and I guess we could have done that but it would have made the monetary supply not fixed. That's the easy answer. On the test set, we do allow for burning indefinitely because the test set XCP has no value and there it just makes it easier for developers to work with XCP. But that's it, that's most of the issue. It's not that complicated really. But maybe you have some more questions.
If you do, ask them in the comments below or tweet them to me @DeRosetech. I'd love to answer your questions. And if you like this channel subscribe to it and I'll answer some more. Later, party people.