What exactly is XBTC?
XBTC is an asset representation of BTC in Counterparty.
Apparently, you could send Bitcoin to a Counterparty gateway, and get the same amount of XBTC back in turn. These could then be traded for other Counterparty assets. The operator of that gateway claimed that it was cheaper to trade thusly than on Bitcoin exchanges.

I've found an announcement for a XBTC gateway here: XBTC Gateway released. It appears to me that the service has since been shut down due to regulatory concerns.