Counterparty announced in a press release that they successfully implemented Ethereum's "smart contract" scripting language on the Blockchain. The press release stated:

"We've ported Ethereum's language and virtual machine over to the Counterparty platform, using the pyethereum codebase.
…
Anything that one could ever do with Ethereum, one can now do with Bitcoin and Counterparty."

Counterparty differs from Ethereum in that it utilizes Bitcoin's Blockchain instead of attempting to create its own through mining. Bitcoin transactions carry Counterparty transactions, including them in the Blockchain, and are identifiable by unique strings stored in the Bitcoin transaction's "data" field.

The tokens used to fund Counterparty transactions known as XCP, are also different from Ethereum's "Ether". While the Ethereum project funded development through a sale of premined Ether, XCP was created through a proof of burn mechanism – BTC was sent to an unspendable address upon which XCP could be claimed. Additionally, the amount of XCP is a finite number, while the creation of Ether will continue indefinitely.

The economics of Counterparty Contracts will also differ from Ethereum:

"All Counterparty nodes will execute all contracts, and it will be the holders of XCP that receive the fees for the execution. The simplest and most robust way to make this payment will be just to destroy the fees, and to thereby reduce the money supply, as this is equivalent to paying the fee out to all holders of XCP in proportion to the size of their holdings. Unlike with Ethereum, the fees will not be constant values, but rather fractions of the total extant supply of XCP, so that no amount of computation will deplete the supply of XCP."

Vitalik Buterin gave an enthused reaction on reddit.