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Counterparty Features

Tokens

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Custom Counterparty tokens can be used for a wide range of purposes and act as their own cryptocurrency, while still running on the Bitcoin blockchain. Unlike ordinary bitcoin, custom tokens can be used to represent any kind of value.

Tokens are being used today to:

Asset Exchange ("DEX")

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In the physical word, exchanging assets is fraught by risks and problems, such as potential theft and reliance on an escrow agent or central counterparty. On Counterparty, the roles of escrow agent and clearing house are filled by the Counterparty protocol itself, eliminating unnecessary costs, time, and third-party trust. In any transaction the required funds are debited from each party’s address immediately, and are not released until the conditions of the contract have been met.

Multisignature Addresses

Multisignature transactions require signatures from more than one Bitcoin private key to spend their funds. Counterparty supports various multisignature schemes, such as 1-of-3, 2-of-3,  3-of-5, and more. Using our technology, a Bitcoin “multisignature address” may be created, and some quantity of a Counterparty token sent to it. Some quorum of signers will then be required to digitally verify and sign any transaction that sends these tokens somewhere else.

In practice, this allows for enhanced security measures around Counterparty token access and distribution. Scenarios where this could be useful include:

  • Allowing team members and third-party firms to initiate transactions that can be approved later by management,

  • allowing issuers of tokens to safely store these tokens, as well as to control their distribution, and

  • allowing third-party auditing services to ensure the delivery of goods and services once contractual obligations have been satisfied, and only release funds once verified.

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