Counterparty (
XCP) is an ancient 2nd layer protocol written on top of the Bitcoin blockchain. Next to
OMNI (Mastercoin), it's the second oldest asset (token) creation protocol for cryptocurrency, with Tether (USDT) being the first famous token on the Bitcoin network.
Anyway, the Counterparty Exchange (only accessible through a
Counterparty-enabled wallet) has been up and running since before DEX was even a term, and though the idea never really caught on, some people do continue to use it to buy and sell BTC and a limited number of Counterparty assets, which are generated through burning XCPs.
The most famous Counterparty asset is Pepecash, which is used to purchase
Rare Pepes from a Counterparty-integrated website. This fad was strongest from 2016-2018, before Ethereum really began to dominate (what would go on to become) the NFT industry. Now L2 solutions and other "Eth Killers" are claiming the NFT space as well, but that's for another post.
One of the interesting things about the Counterparty Exchange is that it is one of the first DEXs, and seeing as how I think asset creation on Bitcoin might come back in a big way, I tried to set about using it to snap up some XCPs (which are themselves a token that uses the Bitcoin network to create and manage more tokens).
If you're at all curious, here's how the Counterparty Exchange works.
1. First you have to select the proper market pair (BTC/XCP):
2. Then I clicked on the orderbook and got an error that didn't sound good.
So I doublechecked the fees and sure enough, tx fees are at 71 sat/byte to fit in the next 3 blocks. That is one of the big limitations of Counterparty -- since they do use the Bitcoin blockchain, you can only place an order through creating a (costly) transaction.
3. But really the problem was it thought I wanted to buy the whole order of 995 XCP. Since this is just a test, I'm only gonna buy 20 XCP, which is roughly $41 at 0.00006 BTC a pop, the lowest order in the orderbook. This comes out slightly over $2 a coin, which is above the thinly-traded market value of $1.62 (it is currently only traded on a Japanese exchange and good luck opening an account there if you're not Japanese).
4. So I place the order with a fee of 49 sat/byte because its in the middle of taking forever and paying too much, and now the waiting game begins.
5. And here you go, you can see my BTC address has created a transaction that tells the exchange to place my order; not much to do except wait for my transaction to get confirmed and my order to be filled.
The funny thing is, you have to leave your browser window open or the market-side transaction might not actually ever confirm. It's a weird bug that they tried to resolve a long time ago, but it was just one of those quirks that ended up keeping their DEX from delivering the same experience as a centralized exchange.
It's been 10 minutes and the order is still pending, so I'm just gonna post this much of it for now and follow up when the transaction gets confirmed (fingers crossed).
