ART ON BITCOIN: Counterparty

Permanence is one of the main concerns regarding art on the blockchain, but it is also one of the blockchain's miracles. 

Well, this is until quantum computing takes over, but that’s another story. 

The “durability” that is usually discussed amongst the communities of blockchain art creators is the one achieved through the tech, so we are not considering the permanence of a community, for instance, or of a project that is so culturally influential that it will forever be present in the future development of the space.  

This takes us to two - amongst many others - big debates: 

1) Are artworks that record the full image data fully on-chain more permanent than a ‘regular’ NFT, where usually only a hash of the metadata is stored on the blockchain while the actual image is hosted off-chain on decentralized archives (e.g., on IPFS, Arweave, etc.)? 

2) Is art on Bitcoin more permanent than art on Ethereum, for instance? 

People question whether putting all data on-chain clogs the blockchain or takes up too much block space, potentially making the network more centralized or less efficient. On Bitcoin, for example, Ordinals inscribe actual image data directly onto satoshis, which increases the competition for block space. Some argue that this drives up transaction fees and prioritizes art over financial transactions, deviating from Bitcoin’s original purpose as a monetary network. On Ethereum, fully on-chain NFTs work differently. Instead of directly inscribing image data, they store either generative code inside smart contracts (e.g., Art Blocks) or actual image data inside contract storage. While this doesn’t “clog” Ethereum’s blockchain in the same way as Bitcoin Ordinals, it increases gas costs due to storage demands. This can make minting or interacting with NFTs expensive but doesn’t fundamentally slow down Ethereum’s base-layer transactions. So, while both blockchains face scalability challenges, another debate within the debate arises: Is the tradeoff for permanence worth it? Does storing art fully on-chain contribute to or threaten decentralization?

We will never come out alive from these arguments, but for now, returning to the first question, we assume that yes, in the most widely shared perspective, fully on-chain art is more permanent. 

What about our second point? Why would we consider art on Bitcoin more permanent instead? 

There are different reasons. For instance, many consider Bitcoin a more permanent home for digital art than Ethereum due to its historical significance, immutable protocol, and true on-chain storage. As the first and most battle-tested blockchain, Bitcoin holds unmatched historical value, making anything inscribed on it part of crypto’s foundational record. Unlike Ethereum, which evolves through upgrades and relies on smart contracts that can introduce risks, Bitcoin’s conservative, stable nature ensures long-term security. Also, for instance, one of the art projects on Bitcoin, Ordinals, allows full data inscription directly on-chain, unlike many Ethereum NFTs that - as we previously mentioned - store only a hash while relying on external storage or store the data in the smart contract. Additionally, Bitcoin’s robust decentralization and unwavering store-of-value mindset further solidify its role as the most reliable blockchain for truly permanent digital art, reinforcing the idea that art inscribed on Bitcoin is more likely to remain accessible and intact for generations to come.

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What are some of the most known art projects on Bitcoin? 

Although Bitcoin was not originally designed for NFTs or digital art, several projects have emerged over the years, utilizing different methods like Counterparty, Stacks, and Ordinals to bring art onto the Bitcoin blockchain. While Counterparty was one of the earliest protocols that facilitated the creation, trading, and ownership of digital assets on Bitcoin, including digital art, in the last years, we also witnessed the rise of projects that enable full on-chain art storage, like Ordinals and Stamps. 

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In this article, we are going to talk about Counterparty. 

Counterparty - What is it? 

Counterparty is a protocol built on top of Bitcoin that enables to create, trade, and store digital assets on the Bitcoin blockchain. Launched in 2014, it was one of the first platforms that made it possible to issue NFT-like collectibles and tokens on Bitcoin, long before Ethereum popularized digital assets. ​​Bitcoin’s blockchain was designed primarily for sending and receiving BTC, not for handling digital assets like NFTs or tokens. Counterparty solves this by embedding extra information into Bitcoin transactions, allowing users to:

- Create and manage digital assets (Similar to ERC-20 tokens, but on Bitcoin)

- Issue and trade collectibles (similar to NFTs)

- Exchange tokens directly on Bitcoin through a decentralized system

- Have Escrow & Betting Mechanisms (some smart contract-like functionality is possible using Bitcoin script conditions)

To do this, Counterparty stores metadata in Bitcoin transactions using a special method called OP_RETURN, which allows small amounts of additional data to be written on Bitcoin’s blockchain. This makes it possible to track ownership and transfer digital assets while still benefiting from Bitcoin’s security.

Are Counterparty Assets NFTs? The short answer is that they function similarly to NFTs but are not exactly the same as Ethereum-based NFTs (ERC-721 or ERC-1155).

 How They Are Similar to NFTs:

- Each token is unique or issued in limited quantities, making them collectible.

- They can be owned, traded, and verified on a blockchain (Bitcoin, via Counterparty).

- They were among the first digital collectibles ever issued on a blockchain, predating Ethereum NFTs.

How They Are Different from NFTs:

- No Standard NFT Format: Counterparty has no ERC-721 or ERC-1155 equivalent. Instead, it uses custom token issuance rules.

- Metadata: Counterparty assets store metadata differently—they don’t have a built-in system for linking images like Ethereum NFTs. Instead, the metadata is often referenced externally.

- No Smart Contracts: Unlike Ethereum, Counterparty does not use smart contracts for NFT functions like royalties, staking, or utility-based interactions.

Counterparty assets are best described as “proto-NFTs” or “historical blockchain collectibles.” Although they are not technically NFTs by today's Ethereum standards, they played a foundational role in blockchain-based digital art and collectibles. Please don’t miss this gem, an article written by Scrilla (artist, dj, co-founder of Fake Rares and creator of DJPEPE) in 2017 about how to create a token on Counterparty. 

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Sorry, we still haven’t even mentioned art…

First of all, I strongly encourage you to watch this video by artist Davesta, which goes through a timeline of Counterparty, focusing on the creative side.

If you know me a little and if you read the very first article that I wrote for you here on the 100 collectors platform, my own adventure in the world of art and blockchain started with a project that exists on Counterparty: Rare Pepe. I will not write about what Rare Pepe is here again, but if you want to find all the info you can think of about Pepe, please visit this page. And also don’t miss THE all-in-one platform for everything Pepe, Pepe.wtf, the center social hub of the Pepe community.  

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Instead, I would like to focus on the role that the Rare Pepe project played in shaping not only the crypto art world but also digital culture in general. 

To do that, I will start by talking about another project that is crucial to the beginning of everything, that also shaped our understanding of digital culture, and that is one of the reasons we are all here, capable of collecting digital assets: Spells of Genesis. 

At 100 collectors, we have the fortune of having the creator of this pillar project in our community of collectors, Shaban Shaame, also known as the “Godfather” of digital art. Enjoy this interview from 2018 that he had with R.A.R.E. Art Labs on the occasion of RareAF 1. Also, a few weeks ago, Shaban wrote an excellent comprehensive article about Spells of Genesis that you really shouldn’t miss if you want to know everything about it. Please do yourself a favor and spend some time of your day with this.

In 2022, Dada - a collaborative art platform where people worldwide speak to each other through drawings and cryptoart pioneer collective (they coded royalties in a smart contract for the first time in 2017) - organized the first Historical NFT Festival in Barcelona in October. Fanny and I were asked to help organize the programming and curation of the retrospective, covering the history of NFTs from 2014 to 2019. For the retrospective, we combined four existing timelines that were carefully created by NFT historians and researchers, such as Martin Lukas Ostachowski, White Rabbit, Leonidas, and Blackstar (find the curatorial text and photos from the exhibition here). During the research, the more we were putting the pieces of the puzzle together, the more we noticed the influences of these projects on each other, and the more I understood the importance of Counterparty and its signature projects in shaping how we experience digital culture today. Specifically, there is a story that I always tell. Spells of Genesis gave the first “digital collectors” the chance to be born in the way we intend to collect certified digital assets. It’s 2015; imagine people playing a video game and being rewarded for winning actions with digital assets (cards) and asking themselves: but do we actually own these digital artifacts? How can we prove that we are the owners of these digital cards? We can attach these assets to a blockchain token and prove existence, time, and ownership. In 2016, in the same groups of people who played Spells of Genesis, met, commented, and traded on Telegram, Mike posted a digital card that he created and attached to a Counterparty token one day in September. He played with the already well-known meme of Pepe the Frog and used the “face” of Satoshi Nakamoto. The asset is called RAREPEPE, today better known as the Nakamoto card. What happens when this person tells his friends that he created a card? Now, people start thinking that they cannot only collect and trade but also create their own cards and assets. So now we assist at the birth of an unstoppable phenomenon, where artists and creators of tokenized digital assets are born. I hope this helps clarify the massive importance and influence of the Counterparty projects in the blockchain, NFT, and tokenized art. 

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I also found a fantastic, amazing unmissable article written by JP Kanssen, Creator of OLGA & JPJA – first 1/1 and 1/N NFTs on Counterparty, who also states a very poetic fact: 

“Due to a quirk in Counterparty, to properly issue an NFT the supply must be locked through a second Bitcoin transaction. This extra step means that few, or none, of the NFTs have been created without intent”. Here is his “A Timeline of 1/1 NFTs on Counterparty,” covering the period from 2014 to 2021. Please have a look to get an idea of the history of unique NFTs and what was created before 2021. And another as another Counterparty Historic NFT timeline created by Davesta.  

We talked about Spells of Genesis, but other amazing, innovative games found their home on Counterparty. Two of them are Bitcorns and Takara. Bitcorns is a satirical blockchain-based farming simulation game and a collectible project that plays on the themes of farming games like FarmVille and meme culture. I remember when I discovered it in 2018, laughing so much at each card they showed me; it’s so fun, so bright, so subtle. 

Takara is a treasure-hunting game that allows users to drop and find Counterparty tokens (including assets like Spells of Genesis cards, Bitcorns, and other digital collectibles) based on GPS locations. Created in 2016, Takara demonstrated how blockchain assets could be tied to physical locations, a concept that later inspired location-based NFTs and metaverse applications. It provided a trustless, decentralized way to distribute and discover digital assets without needing a centralized server: decentralized Treasure Hunts!

I can’t finish this article without mentioning Counterparty's unique perspective on and relationship with music. Counterparty has always played a significant role in blockchain-based music distribution, ownership, and collectibles, pioneering use cases for musicians and fans long before Ethereum-based NFTs became mainstream. I will mention two pillar examples here.
DJ PEPE, a Rare Pepe card created by Scrilla, was more than just a meme. It symbolized how blockchain technology could intersect with music, digital ownership, and decentralized culture. DJ Pepe is one of the first-ever music-related blockchain collectibles. DJ Pepe isn't just a static trading card; it actually represents ownership of a piece of music, making it one of the earliest examples of music NFTs. When you own a DJ Pepe token, you're not just holding a digital collectible; you’re also granted access to an exclusive music track, tying digital art to audio in a way that predates most modern music NFT experiments. This concept, where a blockchain asset serves as both a visual and musical collectible, was groundbreaking at the time, demonstrating how digital ownership could extend beyond just images and into the realm of music distribution, independent music culture, free from traditional gatekeepers. DJ Pepe effectively laid the groundwork for what later became the norm in blockchain-based music, showing that a token could be more than just a static representation, it could be an access key to unique, verifiable digital content.

Tatiana Coin: Tatiana Moroz is a singer-songwriter and one of the earliest pioneers of blockchain-based music, best known for creating $TATIANACOIN in 2014 on Counterparty. This made her the first artist to launch a personal cryptocurrency, a groundbreaking move that allowed her to connect with fans in a completely new way. By holding her token, supporters could access exclusive content, buy music and merchandise, and even participate in her creative journey without intermediaries like record labels. Long before music NFTs became mainstream, Tatiana Coin demonstrated how blockchain could be used for direct artist-to-fan engagement. Tatiana’s music blends folk, country, and singer-songwriter influences, often carrying messages of freedom, financial sovereignty, and activism. She has written songs about Bitcoin and decentralization, making her a unique voice in the crypto space.