Devil’s advocate here. Colored coins are more “directly” Bitcoin. Critically, you do not have to buy a new currency to use colored coins. One cannot begin to overstate the importance of this little fact. XCP is a new financial barrier. With colored coins, there is nothing to buy. It just works naturally.
What is the true benefit of XCP? What does XCP buy you that colored coins don’t? Help me understand please.
As far as I know, Colored Coins don’t implement any kind of betting on feed broadcasts or paying of dividends on assets, which is what XCP is for.
From the FAQ here:
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Having only one currency that can be used for betting makes bet-matching simpler and easier (and more likely). The currency for making bets cannot be BTC, because the Counterparty protocol cannot debit BTC from a user’s address.
Betting fees are taken as a fraction of a bet, and since XCP is the currecy for betting, it must also be the currency in which fees are paid. Moreover, having the native currency of Counterparty pay fees ensures that feed operators are paid in the most stable and widely-used of Counterparty assets.
Paying dividends in a user-created asset would be tantamount to paying dividends in bonds. Again, BTC is not a viable option.
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