The way I look at future XCP value is by trying to estimate the amount of liquidity that a publicly traded company is going to want to have on a distributed exchange. It may be the case that Counterparty and Medici provide a pressure valve so don’t need to handle NYSE-like volumes and won’t require NYSE levels of liquidity. Still, it’s not hard to see the world having $1B worth of XCP to service that pressure valve and more if significant amounts of betting and CFD activity happens. $1B/2.6m = $380 or about 100x in dollar terms from here. Of course I don’t know the future, so you are responsible for your investment decisions.
"XCP is also valuable because of the Counterparty Protocol’s ability to migrate to a different blockchain if needs be. I.e. if Bitcoin fails, Counterparty does not necessarily fail."
Good point. It helps that XCP is natively tied to Bitcoin wallets, but Bitcoin could one day be surpassed in terms of liquidity and security by a killer altchain. It doesn’t exist today IMO, but it could happen. In which case, Counterparty would have no problem moving to the new chain for its increased security and presumably speed benefits.
Another thing to think about is, if the CFD, predictions, and options markets take off on Counterparty, there will be greater liquidity in holding XCP than in holding Bitcoin or whatever the “universal” currency is, because options securities and derivatives are much bigger markets than Forex alone. And even then, the Counterparty DEx would still be competing with centralized currency exchanges given that distributed trading has imposes no user ID, KYC or AML on signup. And there are no reporting requirements like FATCA to think about since there is no brokerage holding your assets. For anyone who found themselves caught up in a net this tax season, they understand that this is a MASSIVE win for decentralized trading. No one knows it’s you trading means no government gets to know the details of your trading gains. And since you’re in control of the private keys at all times, you don’t have to worry about middlemen stealing all your assets, filing SARs or manipulating their internal trading engine…
I think it is very important to stress that XCP ownership is stake in the protocol/network. This is vital for democratic consensus about the future direction of the protocol. There are many big decisions that will have to be made. Consequently, there will be many individuals/organisations that will want a significant stake to have their say on these kinds of things.
I am beginning to believe that the fiat price of XCP is completely irrelevant. What matters, I think, is the ratio of XCP to BTC (for as long as Counterparty is running on top of Bitcoin at least). Since XCP can do everything that BTC does and more, I see no reason why it cannot be more valuable than BTC. For that, either BTC has to lose a lot of value or XCP has an awful lot of growth potential.
XCP as stake in the network is something that has yet to be proven through any specific action but of course one does not hold XCP beyond utility purposes unless they think the network is going to become more valuable over time.
Whether people talk about XCPBTC or XCPUSD is largely based on their previous experience. If you think Bitcoin, the currency, is hogwash but think there might be value in Counterparty for disintermediating the traditional securities trading infrastructure, or if you’re just new to crypto with no stake in Bitcoin, then you’re going to think in USD. Thinking about XCPBTC primarily is more centered obviously on having a stake in Bitcoin or in thinking that Counterparty is going to be most useful for securities related to cryptobusiness.
I wouldn’t make people quote one way or the other but simply use which one people prefer as a small window into their perspective.
I am beginning to believe that the fiat price of XCP is completely irrelevant. What matters, I think, is the ratio of XCP to BTC (for as long as Counterparty is running on top of Bitcoin at least).
value of investment is only meaningful in comparison to a benchmark, for example, equity fund managers measure against SPX, not USD. "my fund made 5%" is bad if SPX made 10%. BTC is the benchmark of cryptocurrency, there's no question about that.
When will XCP appear on more established exchanges? Kraken would be great.
Looking through them it seems btc38.com would be a logical choice and I believe it was mentioned in the Bitcointalk Ann XCP thread. Fairly many coins there but not like Cryptsy or Bter. I don’t know about them being established but being more exclusive than having 100+ coins is a positive.
Where do people look for their XCP price feeds? I use Coinigy.com.
Anyone else think that 1 XCP : 1 BTC is a reasonable prediction? There are some serious players getting on board recently, and we have scarcity on our side.
I don’t think that 1 XCP = 1 BTC is unreasonable as a ratio, I just don’t think that BTC will be worth the 10’s of thousands of dollars that people anticipate it might in a few years.
Just to post this here for posterity: I’m willing to sell 10,000 XCP for 1.5 Million USD.
Well the supply is certainly limited enough with BTC to drive that high, with global adoption. But I guess we’ll have to see.
Also nice offer. Wonder if anyone will take you up on that.
There is at least one additional reason for XCP to have value. Another spam prevention mechanism:
“There is a small fee per recipient with dividends, to prevent SPAM.” See here - https://github.com/CounterpartyXCP/Counterparty/blob/master/README.md.
This fee is burned. Currently this dividend fee is set to 0.0002 XCP per recipient. I.e. 5,000 dividend recipients = 1 XCP burned.
My take on the XCP price:
Factors influencing the price:
+ Only secondary supply (no mining)
+ Betting : potentially very large demand
+ Still relatively unknown
- Can use Counterparty assets without XCP
- Little XCP needed for fees and asset creation
- Bter uses very large online address : hacking risk w/ short term price decline
Quite a recovery in XCP price over the last day or so after the SEC FUD last week.
Reposting from Bitcointalk:
Even though Warren Buffet hates Bitcoin, his work has helped me realize why Counterparty will succeed.
You can see that it has a strong competitive advantage:
- No fundraiser (avoids legal difficulties, ensures a fair distribution of coins, and gives the developers incentive)
- Slightly deflationary
- First mover advantage
- Uses the Bitcoin blockchain, which has formidable network and security.
And because it uses the Bitcoin blockchain and is fully open-source, it is
essentially anti-fragile. Compared to traditional finance, it has close
to no operating costs whatsoever. In terms of being a technology, it
fits the criteria of both Buffet’s investing style, and Nassim Taleb’s
concept of anti-fragility. Bitcoin and XCP are a valuable and finite
substrate for black swan events to occur. http://en.wikipedia.org/wiki/Black_swan_theory
You can see a validation of this in the all-time charts of Counterparty.
After the burn event, there is a huge spike in value which slowly falls
and becomes a very long period of calm. Then Overstock caused another
sudden and unpredictable increment. It’s not going to stop attracting
such patterns, since the protocol continues to function regardless of
pretty much any circumstance.
At least that’s my reasoning for investing.
Bravo, great post. Great cross-reference to Antifragility. Counterparty definitely exhibits characteristics and properties that make it very well suited to evolving in tandem with this industry and rolling with the punches along the way.
Counterparty’s emergent behavior reminds me of aspects of Cybernetics - https://en.wikipedia.org/wiki/Cybernetics.
The only thing holding the price of XCP back now is the lack of a decent centralized exchange and/or a lite-exchange that uses the decentralized exchange as a backend to better facilitate BTC/XCP trading.
Chicken and egg scenario again, once XCP gains popularity more exchanges will be willing to deal with it, yet if exchanges don’t deal with it, it will be harder to gain mainstream popularity. I speculate this issue will solve itself.