How feasible would it be for the Bitcoin devs to duplicate Counterparty's functionality without the XCP coin?
It's not possible.
What would make it impossible? I was just digging around and found this post from over a year ago with the opposite answer to the same question:
https://bitcointalksearch.org/topic/m.5467658
That person is wrong. I'll let someone who's more technical take the question from here if they have any interest. I'd not worry about it though, if that's what you're doing, worrying about an investment you made in XCP.
Can you tell me in conceptual terms why it can't be done? Why can counterpartyd do something that bitcoind can't do? That doesn't make sense to me.
How big of a concern is it that Bitcoin could build Counterparty-esque functionality directly into their protocol?
It's not possible. Bitcoin can't escrow value, which means that you can't build (decentralized) smart contracts directly onto it. That's the value of XCP. It can actually act as a value escrow.The reason it won't be built into the BTC protocol is because it's a huge risk. It would get away from BTC's main function as an engine for settling BTC transactions. As you see with colored coins, you can do some asset registration if you're creative. But you will never be able to escrow value on Bitcoin.
