It’s a common theme in conversation that Bitcoin has not yet reached its true, unlocked potential. There’s no question that the developed protocol is at the brink of human technological advancement, but there are still more ways to utilize Bitcoin and move forward. Counterparty is one of those steps forward into Bitcoin 2.0. It’s a person-to-person decentralized exchange that allows users the ability to create their own tokens for bitcoins and Counterparty currency (XCP). Now, Counterparty users can produce unsigned transactions that can be signed by an Armory offline wallet, making it the first Bitcoin 2.0 Platform to offer the function.
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Armory is considered one of the leaders in offline storage, also known as “cold storage.” This practice is sometimes seen as an inconvenience in comparison to “hot wallet,” but it protects against any hackers or malware. With Bitcoin inherently allowing the userbase to be their own bank, it also puts forward the responsibility for those same users to have the proper security measures installed.
Counterparty funds can now be stored on an Armory offline computer, but then accessed from the Counterparty wallet, named Counterwallet. The process looks to be a mixture of a hot wallet with cold storage security. Along with all of this, Counterparty recently announced its multiple-signature support.
“It’s great to see more tools being built to make cold storage and multi-signature storage more accessible,” said Alan Reiner, Armory’s founder and CEO. “We’re happy that Counterparty has chosen us to help safeguard its users’ digital currencies.”
Now, Counterparty users can spend funds quickly and securely, without having to make any compromises.
“We are completely dedicated to eliminating worries related to security for those investors on our exchange,” said Evan Wagner, who along with Robby Dermody and Adam Krellenstein, founded Counterparty in 2013. “Our introductions of multiple-signature support and Armory support are proof of that.”
How Does Counterparty Make It Work?
There’s a lot of information that needs clearing up, as this type of technology is highly complex and truly at the cutting edge of Bitcoin security. Counterwallet is an online wallet that houses the Counterparty currency. After downloading the official Armory wallet, users can create an Armory offline address on Counterwallet. By copying the address from the installed Armory offline wallet and pasting it into the Counterwallet box, a new address can be created. Then, sending is a breeze. Users simply send the amount of Counterparty as normal, and instead of seeing the transaction processed, users see a dialog providing them with the unsigned transaction text.
Copy the text down to a text file, put it on a USB, and take the file to whichever offline computer is running Armory. Load the file and sign the transaction and safely eject the USB. Take the text file back to the online computer running Counterwallet and broadcast the transaction.
The Importance of Cold Storage
It takes a few more steps than normal, but it makes a world of difference. It seems that every few months someone becomes the victim of a malicious theft. Not only that, but hackers are inevitably going to get better and better as time moves forward. Putting in place all the steps to keep your money safe is incredibly important, and it is something that all Bitcoin, and now Counterparty, users should put in place.