What is "counterparty"

n. (context finance legal English) The other party to a financial transaction

A counterparty (sometimes contraparty) is a legal entity, unincorporated entity or collection of entities to which an exposure to financial risk might exist. The word became widely used in the 1980s, particularly at the time of the Basel I in 1988. Sometimes it is used instead of unincorporation. The legal entity notion is using as counterparty.

Well-drafted contracts usually attempt to spell out in explicit detail what each counterparty's rights and obligations are in every conceivable circumstance, though there are of course limits. There are general provisions for how counterparties are treated under the law, and (at least in common law legal systems) there are many legal precedents that shape the common law.

Counterparty is a financial platform for creating peer-to-peer financial applications on the bitcoin blockchain. The protocol specification and all Counterparty software is open source. The reference client is counterpartyd and a web wallet called Counterwallet showcases all protocol features. The protocol’s native currency, XCP, is the fuel that powers Counterparty. It is slightly deflationary, with approximately 2.6 million XCP having been created by burning Bitcoins in January 2014. Counterparty provides users with the world's first functioning decentralized digital currency exchange, as well as the ability to create their own virtual assets, issue dividends, create price feeds, bets and contracts for difference.