The smart contract revolution began when Ethereum launched in mid-2015, sparking widespread interest in decentralized autonomous organizations, decentralized applications, and programmed contracts. Li
The smart contract revolution began when Ethereum launched in mid-2015, sparking widespread interest in decentralized autonomous organizations, decentralized applications, and programmed contracts. Lisk arrived earlier this year as a platform enabling developers to build and deploy decentralized applications and blockchain sidechains. The DAO made headlines by accumulating more than $170 million worth of ether—specifically 12.02 million tokens—setting a new standard for crowdfunded projects.
Still, not all observers embrace the enthusiasm. Trevor Altpeter, a director of the Counterparty Foundation, expressed cautious skepticism: "My opinion, and largely the opinion of those involved in Counterparty, is that there is an excessive amount of hype surrounding these [DAOs, dapps and smart contracts] projects. We expect that it will take some time, just like the trajectory of Bitcoin, before you see smart contracts being utilized to their full potential. […] The reason it will take time for smart contracts to be fully utilized goes back to how most of these smart contracts must escrow value. As a result, their usefulness is directly tied to the valuation of Bitcoin and Ethereum. If these cryptocurrencies continue to grow in value you will see smart contract uses grow in tandem."
Seeking to advance smart contract adoption, the Counterparty Foundation—a non-profit steering the Counterparty protocol and its ecosystem—announced an ambitious undertaking: bringing the Ethereum Virtual Machine to Bitcoin. This would empower developers to craft and deploy smart contracts matching Ethereum's design directly onto Bitcoin's ledger. Following testing procedures, the rollout is targeted for within one month.
Applications range across numerous domains: decentralized autonomous organizations, automated escrow services, identity infrastructure, distributed social networks, and consensus mechanisms for voting. Counterparty itself provides free and open-source software for peer-to-peer financial applications on Bitcoin, with several notable projects already built on its platform: LTBCOIN (Let's Talk Bitcoin), GEMZ (GetGems), and SJCX (Storj).
Ruben de Vries, Counterparty's core developer, laid out the motivation: "We are pushing Bitcoin functionality forward by porting innovative features from the Ethereum project to the Bitcoin blockchain."
Bitcoin's economics make it singularly suited for smart contracts involving value transfers. Altpeter outlined the technical setup: "Put simply, you hold Bitcoin, Counterparty (XCP) and Counterparty assets in the same Bitcoin address. This means they all can share one private key making key management and security much easier."
The fundamental requirement for most smart contract applications underscores this advantage. Altpeter explained: "Most of the uses for smart contracts rely on the ability to escrow value directly. Since Bitcoin is the most valuable blockchain it is the only blockchain that currently accommodates this niche. Ethereum will have to become significantly more valuable before it would be realistic to build uses that involve escrowing value."
Users utilizing this system gain access to all of Ethereum's capabilities. The implementation includes adjustments tailored to Bitcoin—particularly extended block times and correspondingly stronger security—but feature parity is maintained.
