Bitcoin Forum

(I don't fully understand them so I'm posting this)

Are they even similar? What are the advantages/disadvantages of each? 

Colored coins are highly limited functionally because they do not include the breadth of message encoding which Mastercoin uses.  However, some will say that Mastercoin is damaging to the blockchain as this same encoding leaves a sort of residue of unspendable outputs all scattered about.  My understanding is that Mastercoin is trying to improve that with a more elegant way of encoding messages into the blockchain without abandoning bits of bitcoin.

Can you explain why this is?

Mastercoin offers an array of different features which are not present in Bitcoin. If you do some research, you will see that Mastercoin improves on the Bitcoin protocol, and it is much better than the colored coin concept in many regards.

Neither Mastercoin nor colored coins support SPV security. You can't tell if you've received a payment unless you are running a full node and storing the entire index (extended with an additional index for the overlay coin). And storing/updating the additional index could be arbitrarily expensive, especially if you want to support many different colors.

Most mobile phone clients use SPV security. You probably can't have a comparably secure phone client for colored coins or Mastercoin.

It doesn't seem like colored coins adds too much to the index, since it has the same structure of existing txouts - you could just associate an optional tag in the same LevelDB you use for ordinary bitcoin outputs. Also any effort core-devs take to keep the index small (like discouraging dust) will also help keep the colored coin indexes small (although it may increase the cost of spending them). I have no idea what the complexity of running a Mastercoin index is, but I suspect it's much larger.

A detailed comparison between Mastercoin and colored coins is available at http://w3.reddit.com/r/coloredcoin/comments/1o6yke/colored_coins_or_mastercoin/ccpgy0x.

Colored coins are technically superior and based on a much stronger conceptual foundation. Mastercoin is more ambitious, aspiring to offer more features than colored coins. Colored coin proponents aim to develop a truly p2p platform, while Mastercoin is much more centralized and managed to raise funding with promises of getting rich quick.

Not true. Colored coins transaction validity is local, and therefore verification requires just the relevant tx subgraph, which is small. This means SPV clients can definitely work.

Mastercoin, on the other hand, uses a message system for updating a global state, and thus does not support SPV.

What bounds the size of the relevant tx subgraph?

I think I was wrong and you do not need to keep the entire UTXO index to validate colored coins. But you would need to keep a similar index for every utxo that bears a color you're interested in. I think this is what you mean by transaction subgraph.

Total nonsense.  It sounds like you are bitter that colored coins has no viable funding model.  JR never wrote a word about 'get rich quick'.  Don't try to associate scammy fund raising with Mastercoin just because your pet project is dead on arrival.

More nonsense.  Mastercoin has some less than perfect tricks - they are trying to find ways to clean those up.  Colored coins are in fact technically inferior because they will never be able to support most of the functionality being build into Mastercoin protocol.  You are unbelievable Meni.  

Are you going to continue to beat down Mastercoin merely because you missed the deadline to participate?  What a stupid reason to argue colored coins is 'superior'.  Colored coins is dead.  That project is finished and nobody is working on it.  If somebody does decide to waste some hours on it, they do not get paid nor benefit in any other fashion.  It is merely a fun place to burn up a few hours while you are supposed to be doing real work.  It uses the same non-profit model as all the other loser projects which are assured to make little or no progress.  Colored coins is and always will be a mere hobby for people who love to waste time.  Mastercoin, if they crack a few more technical hurdles will be a very worthy and profitable project.  Don't worry, it is not too late.  You can buy Mastercoin here: https://bitcointalk.org/index.php?topic=287145.320  Actually a very good deal at .03 BTC / MSC.  Note the last buyer was the project leader JR!  Even JR is paying 3X the original price.  

Mastercoin made fantastic progress in the last month.  Colored Coin - got a pretty video with a stupid mascot.  

Open-source, decentralized platforms generally lack a good funding model. They rely on the vision and hard work of their proponents to move forward. It's easier to raise funds for centralized services, but those are just that - centralized services which should not be relied on at scale, just like the legacy financial system.

So yes, it's unfortunate that a choice has to be made whether to do something good or to do something fast. But it's clear to me what the choice should be. We have a saying about driving recklessly - if you end up in a hospital, it doesn't matter how fast you get there.

You're right, he didn't say "quick". He certainly did try to convince people they'd get rich though. And he did design Mastercoin so that issuing is done over a month, as opposed to Bitcoin which is issued over many years.

Colored coins are alive and well, thank you for the concern.

That's not being technically inferior, that's being less feature-rich.

Funny. See this transaction (https://blockchain.info/tx/546a406a131089e7c2f27d34a93a4d27441d98d096404d6737c5ad5b5e61a09b)? That's the second ever investment in Mastercoin (it was beat by 3 seconds to being the first). And it was sent by - you guessed it - none other than myself. I still keep those mastercoins. I made additional investments in Mastercoin, which I've since sold for a profit.

No. It's just not being hyped as heavily as Mastercoin.

Real work = doing something meaningful. True, sometimes such efforts don't come with an immediate reward, but that is a price true visionaries are often willing to pay. Working on CC is much more beneficial to society than supporting Mastercoin.

Good luck.

I've just finished selling most of my MSC, why would I want to buy them now ???

Colored coins has made steady progress for many months, and will hopefully continue to do so long after Mastercoin's 15 seconds of fame are forgotten.


All in all, it saddens me that members of the Bitcoin community, who should appreciate decentralization over proprietary services, are so supportive of Mastercoin.

I don't know of an easy way to bound it, but as an SPV client you don't need to be aware of all transactions of your desired color. Only those that your output traces back to.

But some of the Mastercoin features are stupid. For example, transient data like the bid/ask orders do not require consensus.

This is not entirely correct. All you need is to link the colored coin all the way back to the genesis of the color, and the link could be obtained by SPV. E.g. someone sends you a color coin. You look for its parent, grandparent, ......, until you find the genesis.

Unbelievable!  'vision and hard work of their proponents to move forward'  This is why your project is going nowhere.  There is another word for 'free' - it's 'worthless'.  If your people don't get paid - it's a hobby.  There is no motivation to get it moving.  So it will sit there forever with almost no progress - which is precisely what colored coins is doing.  Colored coins is MUCH older than Mastercoin, yet Mastercoin is MILES ahead in just ONE month.  Your Colored coins is DOA.

'Open source' - of which Mastercoin is - doesn't necessitate poor funding models.  "It's easier to raise funds for centralized services" - this is more crap from you.  You are a crap nozzle.  Being 'distributed' doesn't mean you can't raise funds.  Mastercoin is distributed - it lives on top of the bitcoin blockchain.  Your notion that you can't raise money because your colored coins is more 'distributed' than Mastercoin is rubbish.  Bitcoin itself has a very clever excellent funding scheme - and of course it too is distributed.  Bitcoin motivated thousands to set up mining nodes - by giving out coin.  

Quit blaming your lack of funding on the 'open source', 'distributed' nature of colored coin - that is crap.  Also, quit saying Mastercoin is 'ponzi'-ish 'get rich quick' scheme.  This is just you being jealous that you didn't get involved early.  

Colored coins is dead.  Done.  Finished.  Finito.  JR - did what colored coins should have been doing and he did it better and with imagination.  

...a real community philanthropist!  Hahahaha.  'Doing it for the good of mankind'!  Three cheers for you Meni.  Now I am 100% sure colored coins is fully doomed - you are doing it for the good society.  Have fun with that.

Finally something we can agree on. Unbelievable!

No, it is well known that in the information age, there is a wide gap between something having value and being able to monetize it.

Fortunately, for some people the personal motivation structure is a bit more complicated than being just about getting monetary rewards.

There's this well-known informational illustrated video made about a study showing that for tasks requiring higher cognitive functions, increasing the monetary reward degrades performance, but I forgot where to find it... Help anyone?

EDIT: Here it is - http://www.youtube.com/watch?v=u6XAPnuFjJc

Yes, Bitcoin gave out coin to incentivize its development... Over an effective time of 12 years. Do you think we'd all be here if Bitcoin issued all coins over 1 month, like Mastercoin did? No, issuing over 1 month means it's centralized, and we're not interested in a centralized currency.

I didn't claim to do anything for the good of mankind. And yes, if it was just me doing colored coins, it would be doomed. Fortunately, it's not.

Ok, now I know you're not reading my comments. Happy trolling.

So.... the time to check this way grows unboundedly with the number of transactions since the colored coin was created? I agree it still might not be too bad in practice. At some point keeping an index of all available colored coins may be cheaper.

It does leverage the existing transaction validation in a clever way, so it's definitely much closer to SPV security than I originally thought. Thanks for all the clarification!

Your comments are garbage - aint nobody got time to read that garbage; we've got code to write.  Of course, if your project isn't going anywhere you can write all day about being #2 investor at Mastercoin. 

Just think, if you are correct and Mastercoin fails, you will likely be the most profitable investor having sold his position for about 2.5X.  Pretty good for a project you don't like and don't believe in.

If this becomes a real problem, it may be solved with "re-genesis": sending an old colored coin back to the issuer for a new one.

I think that by the time this is a problem, Bitcoin or an alt would be modified to natively support tag-based coloring, and then verifying a CC transaction will be as easy as verifying a Bitcoin transaction.

Well, I have a fully workable solution: https://bitcointalk.org/index.php?topic=253385.0 , but "there is no way in hell you are going to get a colored-coin-specific opcode included in Bitcoin"

Peter is known as a vehement proponent of blockchain frugality, I wouldn't count his comment as authoritative.

Currency is a special case of arbitrary assets. If there's no support to turn Bitcoin into a platform for decentralized digital arbitrary assets, we'll just have to create a new one based on the same principles.

Ah, the bitcoin forum. There is never any lack of people spoiling for a fight here. :)

I would have invested in colored coins if investing in them were possible. They really are a very simple and elegant approach to releasing smart property, and they have smart people working on it. However, it wasn't possible to invest (aside from just owning bitcoins), so I tried to make something to accomplish those goals (and considerably more) which people COULD invest in. Now we have MasterCoin, and we're adding features and addressing technical concerns as quick as we can.

I'll always have a warm place in my heart for Meni and Alex and the other guys working on colored coins, no matter how much they criticize MasterCoin. In truth, we all have very similar visions of what we want bitcoin to do, but different avenues trying to get there. I feel similarly about bitshares.

In the end, the market will decide. In the meantime, who could ask for a more entertaining set of projects to work on and watch?

I finally found what I was looking for -
RSA Animate - Drive: The surprising truth about what motivates us (http://www.youtube.com/watch?v=u6XAPnuFjJc)
An interesting watch.

Thanks JR :)

Actually I agree that it might not be fair to require all full nodes to validate the color. It could be done in an alternative way. For example, the color coin issuer may trace all their color coins in the blockchain, calculate the merkle root of the txid, and timestamp it on the blockchain. Therefore, SPV nodes only need to look up the merkle root to determine the validity of a color coin

Am I correct in assuming that to use Mastercoins you have to use coins that originate from the genesis address whereas colored coins you can use any BTC you want? If so, will this keep Mastercoins value similar to BTC since a more available alternative is available through colored coins?

Too soon to know. Mastercoin has momentum and funding. Coloredcoin does not.
I'd say Mastercoin has the advantage but Coloredcoin will be important for altcoins.

Well, not exactly. Colored coins are coins with a tx subgraph that traces back to a genesis output specific for a color, which can be chosen by the color issuer to be from any coins.

But Mastercoin doesn't trace coins in that way. The bitcoins that are used for authorizing Mastercoin transactions don't need to trace to anything. However, only private keys that have sent funds to the Exodus address during issuing, or received mastercoins since, are recognized as having mastercoins they are able to send.

Also, it is not clear to me that using Mastercoin will require having significant amounts of mastercoins.

Colored coins have funding, most notably a few 100's of BTC of bounties donated by eToro.

'Mastercoin has the advantage' -  Are you nuts?  Haven't you seen the pretty lizard?

Hey! we finally agree on something.  I posted about this a few weeks ago.  If I only have 10 mastercoins, presumably I can divide them each into 1 million pieces (or more) and enjoy use of the entire Mastercoin protocol and all the great functionality it brings on 10 different share issues for example.  Since nobody will ever practically need more than 10 share issues, there is little or no point in owning more than just a few MSC.  Indeed, owning only 1 is probably sufficient as they are practically infinitely divisible. 

J.R. hasn't commented on this point as far as I can tell.

None of them. Both try to fill a gap in the concept of a currency ... Bitcoin is not bound to any real asset like gold etc., mc and cc try to change this. But I doubt either this is necessary and both possible.

To be honest, I didn't understood none of them. I struggled some time to understand Bitcoin and think I reached some basic understanding. So, outside a little circle of advanced users neither of them will find people which gain enough trust through understanding to risk anything. Also I don't get it how you would reach  a real connection between coins and assets which is trustworthy enough ...

Personally I like cc a little bit more, cause mc presented itself as "a chance similar to the first bitcoin-mining", which in my view appells too much to greed and naivity to be successfull.

There are different visions about what CC or MC should be used for. For me the main application is company stocks. These require trust in the company anyway, which will be established via traditional means, but it will spare the need to rely on cumbersome, centralized exchanges.


So now you understand one of the problems of MSC as an investment. If mastercoins aren't needed in large quantities to use Mastercoin, then the supply of mastercoins will far exceed their demand, meaning the value of mastercoins will be low - even if Mastercoin is successful. An issue which, by the way, I raised 2 months ago.

I agree that JR should comment on that issue.

Well, I guess CC does have its proponents.  However, those who prefer CC are somewhat like this guy.  Not the sharpest tool in the shed.  "To be honest, I didn't understood none of them."  Not to worry ol' chappie - loads of your compatriots similarly didn't understood none of them either.  

OK - sorry to Meni.  I just had to lump you in with this guy despite it being a little unfair.  hehhehehehehehe.

Yeah but some of it is bullcrap. Slaves never had to be rewarded, so if we convince people to work for free what could be better?

At the end of the day people would rather work for rewards than for free when those are the choices (either work for free and not pay your rent, or work for money and pay your rent) and for many in the Bitcoin community that is exactly what the options are.

Rewards alone aren't enough to make you work smarter. You have to get enough sleep, you have to actually enjoy what you're doing and care about what you're doing. Bitcoin offers all of that though. Finally for creative type work or highly intellectual project type work eventually it's not about money anymore. So they are right that you have to pay people enough so they don't have to work for money anymore.

Colored Coin is trying to do something that Mastercoin is trying to do, but with Mastercoin you can get paid and work exclusively on Mastercoin while with Colored Coin you wont be able to quit your day job. What about people who don't have day jobs but who want to work and not have to worry about their bills?

50 Mastercoins are enough Mastercoins so that you'll never have to work again in a few years from now. But the rent is due this month...



There are 21 million million Bitcoins that will ever exist.
There are 600 thousand Mastercoins that will ever exist.

I predict each Mastercoin will easily be worth between 20-30 Bitcoins.
But if we want to be conservative each Mastercoin is actually going to be worth at least 1 Bitcoin. Assume that everyone who has at least 1 Bitcoin will want at least 1 Mastercoin and you can easily see that the price of Mastercoins will easily surpass 1:1.

As for the particulars of how much this or that costs in Mastercoin, who knows? But you can be sure when people figure out what they can do, everyone will want some.

I think the balance JR has to reach is to have enough Mastercoins that they wont ever run out, but have it be scarce enough that the value can continue to appreciate over time.

600,000 is a good number, but the main threat I see to Mastercoin value will be from Bitshares. People will probably sell Mastercoins for Bitshares if that idea actually worked as well as they say it will, but it's very possible that Mastercoin could have first mover advantage and work better too.

JR will have to explain the math of Mastercoin, I don't fully understand and my calculations could be way off, but based on my calculations I'm not selling Mastercoins for less than 2 BTC each. The reason is I predict the demand for Mastercoins will be far greater than the demand for Bitcoins. People will be buying Bitcoins in order to buy Mastercoins so they can do certain things which can only be done using Mastercoins.

Whether my math is off or not depends on whether or not Mastercoins are destroyed after use. If they are destroyed bit by bit over time as I understand it then they'll be absolutely deflationary. The rate of that destruction would determine how deflationary and JR has to answer that. In his whitepaper he suggests 1.5 Mastercoins for 1000 Bitcoins. My calculations suggest that everyone will want to own a few Mastercoins and the price would for sure be at least a few Bitcoins probably prior to the launch and could get as high as 30 Bitcoins per Mastercoin depending on how it works.

This logic is way too simple. As I said - and am "this guy" flamed for it - I don't understand the concept. But to reach this the mastercoins need to develop any real advantage over Bitcoins. As I see it by now it only has disadvantages (its not accepted, you can't sell it on exchanges ....)


Real-World-Problem. How would you close the right to possess a company stock in cc / mc? You need someone owning it and giving you a contract that this coin represents this share ...

edit: bitcoin' genius is to make the real-world-problem meaningless through mathematics, cause a bitcoin is not bound to anything in the real world, its just a bitcoin, its value doesn't depend on any contract or any item.  cc and mc want to bind a coin to real-world-item, which sounds like a step backward

I don't understand both, for me they are all alt-coins  ;D

The founders / traditional shareholders of the company authorize the color definition of course, and they reference and output of theirs as the genesis output. And they are then obligated to pay dividends to holders of the share coins, just like to holders of traditional shares.

Yes, being detached from the real world gives Bitcoin its power, but it limits what it can do. You can use it as a currency and that's it. If you want decentralized digital representation of other assets, you need some real-world connection.

Mastercoin has every advantage over Bitcoin theoretically. A Mastercoin can represent damn near anything and any altcoin. It can represent bars of gold, it can represent sheep, it can represent websites being sold, it can represent particular items being sold.

What this means is I could use Mastercoins to sell particular items over a distributed exchange built into the blockchain itself. That means anyone with the wallet and some Mastercoins can use the Mastercoins are blank tokens which can represent anything and then sell those tokens. Think of Mastercoin as like giftcards which you can generate for yourself to sell your specific product. The customers can buy your giftcard from you in person and then redeem in from the blockchain at any time.

Nothing like that has ever existed in the history of mankind. It would change how we all do business. It would allow for barter if we choose, or it could be used as a currency if we choose, or anything we define it as. It can be stocks, it can be bonds, it can be a house, and when you have that much flexibility the demand will definitely be greater than for Bitcoins. If I can sell my car easier with Mastercoins than with Bitcoins then I'll be using Mastercoins. Bitcoins do not have owners but Mastercoins do and you can literally own your own currencies and pay people in that if they are willing to work for your currency.


For me I see Mastercoin as an abstraction layer. Like the shift from going from procedural programming to object oriented. It makes it a lot easier to build future protocols on top of it. Mastercoin is actually the start of increasingly complex protocol layers being built on top of Bitcoin. Something will eventually be built on top of Mastercoin and chances are the people who own Mastercoins will be richly rewarded because there are only 600,000.

Expect JR to be one of the richest men in the world a few years from now or in jail.

If you have smart contracts and smart property, it's really not hard to pass ownership of stocks. That is a problem I could solve with bottle caps. The more interesting thing are the new kinds of exotic contracts which no one can even predict.


Bitcoin isn't backed by anything or bound to anything. Mastercoin can bind Bitcoins to anything which changes the game entirely. Now you could use Mastercoins to issue your own corporate coin. People can work for your coin and be paid in your products / gift cards. Later on people can exchange these gift cards to get anything they want using a LETS system.

https://en.wikipedia.org/wiki/Local_exchange_trading_system https://en.wikipedia.org/wiki/Community_Exchange_System

So if my understanding is right, we will see a LETS system built on top of Mastercoin and then the real fun starts.

Not sure that nothing has ever existed like this.  What about stem cells?  Mastercoin are the stem cells of currency/value.  They can be morphed over into anything. 

The smart property feature is probably what people are the most excited about right now, but you are right that it probably is the smallest feature in terms of impact on MSC prices. The main benefit to MasterCoin holders will be that you need MSC to buy/sell these smart properties (but not to create them).

Personally, I'm much more excited about some of the other features, but we need to be responsive to what the market wants if we want to remain in the lead. That's why getting smart property features implemented is our top priority right now (we the need distributed exchange first, but that will be directly used to trade smart property).



Wow. I sure hope it won't be jail!

On an unrelated note, I apologize in advance for being unresponsive for the next few days. I've fallen behind on other important responsibilities in my life :)

I believe that is all assuming Mastercoin does something that colored coins can not. I'm not convinced that is the case. If I was a business who wanted to do an IPO why would I choose Mastercoin to represent my shares over colored coins? If both do the same thing, why convert some of my BTC to MC when CC does what I need? Especially since CC allows shareholders to not have to have the whole blockchain for security? If the price of MC gets expensive why choose it? I'd rather pick BTC CC and then it will cost just a few cents a share to start.


It just seems MC hypes a lot of the future potential and people are seeing it as another currency that will have massive demand but they are forgetting that CC has the same potential for everyone and will be dirt cheap because its just uses a few cents worth of BTC to use.

For it to be jail, you'll have to do something illegal.  I guess that leaves richest man in the world.  I've got to say, I do believe that Mastercoin does bring more function to society than Microsoft - and today that is where the richest man in the world is from.  So perhaps JR will be donating billions to kids in Africa soon.  Hmmm - cool. 

Carlos Slim is from Microsoft?

The Rothschild families work at Microsoft?

It does indeed.  But the Master wins every time in that scenario too.

There are going to be all sorts of jokes and memes about this if JR becomes the richest man in the world for inventing Mastercoin.

It's definitely a possibility. Whether or not he goes to jail? I don't think he will, but Kim Dot Com didn't seem to be breaking the law and they went after him. I think as long as JR has good lawyers and can live where he has to live he will avoid going to jail.

The US might not be the most friendly place to live if the laws become bad for Bitcoin. JR will have enough money to move if the time comes and insulate himself from all that. Also if Mastercoin is a success it is unstoppable. Nothing can stop the protocol if it actually works, and even if they started jailing people it wouldn't stop anything but just delay it.

Eventually whatever the laws were which put people in jail on political charges could be changed. In fact that is what will have to happen, the laws will have to be adapted to be favorable for innovation.
http://www.wired.com/threatlevel/2013/09/dotcom-lawsuit/

How could anyone possibly believe Kim Dotcom didn't break the law?  Copyright infringement is against the law.  So is 'contributory infringement'.  Just because you devise a clever little scheme to pretend you are not contributing to copyright infringement doesn't mean that you aren't.  The courts are not fooled by clever little schemes.  Kim Dotcom was the king of contributing to copyright infringement.  You can't hide behind schemes.  Actually, Kim Dotcom can't hide behind nearly anything as he is rather large.

The only thing Coloredcoin or Mastercoin have in common is that they both will die as failed experiments.

Gotta love them fanboys running around all over the forum creating threads promoting both in effort to either either pump the coin or convince themselves it's a great idea.

Both are fun to watch...


~BCX~

You don't think using CC for stocks or bonds will work or be successful?

mastercoin at least it got a price

No I don't, but admittedly that in itself, doe not make me correct.


~BCX~

So does CC. It's the smallest 0-fee bitcoin transaction that can be sent through the bitcoin network.

Which is why I'm wondering if MC is all speculation for the price. CC biggest advantage is that it will be cheap for everyone to use forever. For MC to be valuable it has to do something CC can't.

Megaupload doesn't infringe copyright. The users may have done so but how is that any different from the users of Bitcoin or anything else?

And it does do things CC can't. You'll find out in 3-6 months.

Perhaps both can live, and others.  The market place doesn't need 1 solution for all problems.

Dang. I'm impatient and I want to know now!  ;)

After very careful legal analysis, this is the conclusion you came to.  However, Federal District Court Judges who have been deciding intellectual property cases for 25 or more years came to a different conclusion.  Maybe your ability to parse copyright law is special, but I am thinking you may have missed something these judges can see. 

In other words, you don't have a clue as to what you are talking about.

Thanks for all the replies. I've looked into it more.

I see another potential problem for mastercoin: it is easily duplicated with little work. Unlike alt coins a new mastercoin clone doesn't need to build up an army of miners. This makes a clone have the same security as the original. All the security comes for free from bitcoin. Someone could come along and clone the project, rename it, and have all the same features with the added benefit of not having to purchase mastercoins. Is that scenario likely?

It's unlikely mainly because Mastercoin will prove itself to be an idea that isn't worth copying.  If I am somehow wrong on that, the clones are not far behind.

Mastercoin being more ambitious is actually a good reason to be very careful of it.  It has to get nearly everything right it tries to do, or falls apart.  It's much easier to build small components are correct than a complete functioning system that tries to do everything.  Colored coins tries to solve one problem, and solve it very well.  MC tries to solve a ton of different problems all using the same solution.  While Mastercoin has the edge of getting a lot of people to try to get rich quick dumping tons of Bitcoins into it, that doesn't make it better.  It just means that they will get to the point of failure faster.

If colored coins don't pan out they won't take ~5,000BTC of investor money down with them; on a technical level both are decent ideas where a good implementation could be useful.

Out of curiosity: does any of the two projects offer (partial) answers to this idea? https://bitcointalk.org/index.php?topic=313151.0

I also agree with that opinion.

I guess the original thread's title should be "Bitshares VS Mastercoins".  8)

IMHO all alternatives lack proper statistical validation.

Only time will tell each one will survive.

BTW, I ask Mr. Luckybit permission in order to quote his post from Mastercoin thread.

I guess it answers at least most of OP's doubts:

No mastercoin proponent can bother, because they have no answers.

Very same thing was said about bitcoin - many, many times.  Good to be in good company.


Investors at this level love high-risk, high-reward.  Nobody is crying if this goes bust.  I'd do it again 20 times - failing the first 19 just to hit on the final deal.  MSC has some very cool conceptual roots.  Let's see if they can get it into a practical form.  I sure can't find any reason which excludes that possibility today.   

If someone announces MSC2 now, I am in.  No regrets.

JR gave me a copy.  No problem.

Having a single Exodus address without Returning addresses is the main reason kept me from investing meanintruly amount of money in this, it doesn't need to be that way.

I think we'll see precisely why Satoshi was anonymous.

Its a shame that he's dragging his family into it as well, it would be different if it was just his own life at risk.

I'm trying to find my way somehow through this noise storm and compare the two...


In JR's paper "MasterCoin Complete Specification" (aka "2nd bitcoin paper"), section "Escrow-Backed User Currencies", there is a picture about stability concept. It utilizes escrow fund to keep the value of a particular backed currency on desirable level, by manipulating the supply of it using MC if I'm right.

Is this feature possible with colored coins? If yes, please would you elaborate on mechanism because I wasn't able to find anything about it. Thanks.

Sorry for my ignorance, but whats colored coins?

The thing that is described at https://bitcoil.co.il/BitcoinX.pdf and http://coloredcoins.org/.

Technically, there is no feature in colored coins to enable this directly, but it could be done in an ad-hoc way. Economically, I don't think this would work in Mastercoin either.

It won't. It's a overly simplified model, like trying to drive  a Google car only by controlling its speed.

Don't waste any time reading that - colored coins is a dead concept now.  Master is much bigger already, has much higher ceiling, has money in hand, does everything CC does, but better.  


Even if it did work, why would anyone ever want to disturb free markets?  That is always a bad idea to restrain free trade in ANY fashion.  'stability' seems good - it's not.  Besides, no matter how clever the algorithm - the efficiency of traders will take into account the movements and they will profit from all imbalances.  It is a perfect way to take randomness out of market movements and leave open the possibility of trading on a program which counters the movement.  

I have started working on a way to get this thing into oscillations.  Once I can get it to oscillate, I'll magnify my profits.  Bet me.

They are going to drop the stability mechanism like a box of hot rocks.  I am sure of this.

Mastercoin is a fail sandwich that will burn a lot of people, including the starry-eyed developers. I've tried to warn them about it, but they just push it aside, because remember - no plan can fail, what kind of crazytalk is that!

Also, they're too busy getting caught up in the "how much it will be worth $$$$" game to even consider any rational objections. So please, implement your exchanges on your 'fail-o-col", and see how fast the Feds get on your case. You won't even be operating in any kind of anonymous and decentralized sense (their parasitic use of the Bitcoin network hashpower excluded of course), so what do you think you will achieve?

Oh right, lots and lots of money - keep on going you blinded idiots.

I doubt it. Who would want to accept MC and its ruthlessly spiked initial wealth distribution if it wasn't for some revolutionary new feature? And CC is working just fine for decentralize exchange without introducing some new cryptocoin barons. I think stability mechanism is either a point of MC's wide acceptance or its miserable failure. Why? Because, decentralized lending is the next big thing. Historically big. I think many people are sensing that, but still nobody has a clue how to do it. Especially how to make it work if a loan is indexed in deflationary currency. This mechanism is one way to do it. If it works.

I admit I haven't understood the explanation given in the article, so if somebody is kind enough to try to explain that once more, I'll be grateful.

The real power behind Mastercoin is the Naysayers who can't figure it out.  This is what drives the price so high.  Nobody in Mastercoin is looking for 'get rich quick' - none of the top holders are selling despite 10X returns.  Clear sign that their true interests are in the long term. 

Did you miss the bus?

Does these updates change the perspective of both Coloured and Master coins?
http://www.coindesk.com/bitcoin-core-dev-update-5-transaction-fees-embedded-data/

It seems that the developers will leave a space of 80 bytes to store for example the hash of a title of property and some extra info in a future proof space on the blockchain for what I understand.

Both coloured coins and master coin could take advantage of this and politely store their information where they have put a space for them.

Are they going to do it in your opinion?

Did I miss something?

Could someone ELI5 on the meanings of these changes?

This is useful for tag-based coloring (as opposed to order-based coloring), however without a network rule enforcing the color tags the usefulness is limited.

Note that colored coins' use of the blockchain is already much less hostile than Mastercoin's current implementation.

I'm going to throw my hat in the 'Coloured Coins' Ring..

It's neater/smaller/tighter.. and I'm a big believer in KISS. [Keep It Simple Stupid]

I like MaterCoin, but if I have understood them both correctly, MasterCoin could be run on top of the CC concept ?

Once you have a coloured coin, you can add all the extra hoopla Master Coin does on top of that. You don't need a separate protocol.

I think MasterC adds things that aren't strictly necessary.. That could all/(almost all) be achieved by a 'clever' bitcoin client, that played with Coloured Coins correctly.

I just read a little bit of both schemes. I'm confused by these design

They want to use a token to present any asset. But assets are not like money, usually they don't have fungibility, that requires a whole lot of validation of each assets: What if the underlying asset is destroied or lost? Who is going to audit the quality of each asset? etc ...

Besides, when it comes to purchase of assets, people seldom need an online system, they will meet personally and do the deal in person

Anyway, the abstraction level of both design is low, they are only suitable for a very limited sample of real world situation where the presented asset is standardized, like 99.99% pure gold bar. But, who is going to make sure you didn't get a tungsten stick? That gold bar is not locked together with a token in blockchain

Actually the validation problem is the core reason that an exchange can not be really carried out on a P2P network: Bitcoin's genuinity is validated by the blockchain, there is no problem at this end, but at the other end, you always need to rely on some authority to ensure its validity. On a P2P exchange if you receive lots of counterfeited USD, what you can do with them?  ;)

This thread's title is borderline racist.

The main use case is company stock. You have to believe in the company of course, but you don't need to rely on any centralized, cumbersome stock exchange.

Surely it would work for a contractual right of any kind (such as bonds, options and other derivatives etc). Also, for any kind of personal property that can be net-enabled? 

The problem with that assumption is that I 'missed the bus' with Bitcoin too, right?

Wrong.

I fully realize the implications of what Master-get-rich-coin is about, well enough, thanks. And you will too - when a) someone eats their lunch for them, and b) the implication of a non-anonymous developer becomes an obvious failing.

Keep going, full steam ahead - never mind that iceberg!

Yes.  Both CC and MSC should handle this from my understanding.

BTW I am writing a weekly update blog for Mastercoin in case you want to track progress: http://blog.mastercoin.org/

Question: If a company wants to issue 100,000 shares of stock, and wants to track each individual share, i.e. each share needs to have an ID associated with it, which coin should they use?

You could do it in CC with advanced color kernels. However note that people will still be able to do mixing transactions.

JR should comment on the ability to do it with Mastercoin.

Right.

Issuing 100k shares of stock, yes. What do you want ID numbers for? If it's to pay dividends, we'll have support for that. If you want to put 100k individual unique numbers in the block chain for some reason, please don't! You could write a script to generate 100k unique pieces of property, but that would be very expensive, both for you and for the block chain!

I was just thinking it would be great to offer that capability, especially if not all shares were created equal (e.g. preferred, non-preferred), furthermore, it can give  peace of mind to the shareholders if an ownership# is added.

People can trade individual shares, blocks of shares, but not fractional.

Yes, I do realize it's not a good idea to store this kind of information in btc blockchain itself.

Ah. MasterCoin would support preferred and non-preferred. That would just be issuing two properties - for instance 20k shares preferred, and 80k shares non-preferred.

This is a great video where an Executive Architect from IBM basically explains the colored coins concept https://www.youtube.com/watch?v=VDO7TDMlxsY

If I was a business who wanted to do an IPO why would I choose Mastercoin to represent my shares over colored coins?


This is a great question which I haven't seen answered yet.

nice blog thx sharing

 ;D

Because you have Mastercoins and because Mastercoins are stable. I am not convinced Colored Coins will be more stable than Bitcoin but if it can then it will do well. For me I like the fact that Mastercoin provides an escrow because I shouldn't have to trust the issuer to honor the contract and having Mastercoins as escrow will allow for people to have a place to put their wealth to use creating new currencies in a way which isn't too much risk. I also like that Mastercoin can act as a unit of measure for the entire system where all wealth in the system can be determined by an unchanging Mastercoin. There will be very minimal inflation in Mastercoin compared to Bitcoin and that means a lot less volatility and a much better measuring unit.

If you like Colored Coin then use it, but if you like Mastercoin then use it. Some people will certainly pick one or the other, some will use both. Some will use Bitshares and some will use all three.

Why wouldn't you use all three?

You could use all three but what I am interested in is what system is best for asset management such as stocks for a company. The thing with Colored Coins from what I understand is that it IS Bitcoin. It is just about assigning certain outputs with a certain value other than their corresponding Bitcoin value.

lets not get nasty... but I do agree there are a lot of dubious claims being thrown around these days regarding various open source projects.  Real money has been spent on Color Coins and for this expenditure to be considered profitable, Color Coins must become a standards for a given set of functions.  At this point I think a number of issues have emerged which suggest this is probably not happening.

There are a number of projects in this space competing for attention.  Color Coins is a respectable idea, the primary problem is that:

It will not only be subject to the issues regarding block chain bloat, microtransactions, and coin dust- it will exacerbate them greatly.  Think Number of Transactions to the power of Number Color Coins.  It's not viable in my view, and the moment you use it for complex financial functions you are seriously pushing performance capacity.  This dovetails into all the other issues that Bitcoin faces in it's natural state.

My project, Confidence Chains, factors out Proof Of Work altogether.  One of the members on the BitcoinX continues to attack me every time I contribute to the conversations.  I originally brought up the issue of Microtransactions/Coin Dust, which this person denounced as irrelevant, later when it became obvious this was a big problem, he pretended as if he knew about it all along(check the list records for evidence of this).  I certainly wish the project well, and Color Coins offers one feature that Confidence Chains does not, and that is Bitcoin's zero trust model.  Confidence Chains gives you much much more though including Decentralized Exchanges, Bond Auctions, and many more features that will be described in upcoming publications.  Virtually any Financial device is possible to implement efficiently and cleanly.  Importantly, it gives you instantaneous transactions and that's a critical factor in many applications.  At best they will need to build protocols ON TOP OF Bitcoin, that are probably MORE complex and difficult to support than basic Confidence Chains.  Meanwhile Confidence Chains gives you these valuable functions out of the box.  I think the inertia that remains is the effort required in order to understand the basic algorithm- it does not behave like Bitcoin and you need to know quite a bit about the basic elements of Bitcoin in order to grasp it.  It's gaining ground at a steady pace though.

https://docs.google.com/file/d/0BwUFHE6KYsM0ZkxLVmFwbXQ3ck0/edit?usp=sharing  

But anyway, we need to have an environment of respect AND competition.  There is reason to be angry if you throw significant money at something and an alternative idea pops up.  C'est la vie, suck it up, etc.  But let's be fair, Color Coins was a great effort and deserves respect for it's contribution to the space.

And this is why, Meni, that Color Coins are generally irrelevant.  Bitcoin was interesting because it had ZERO TRUST, not only at the technology level, but the financial level as well.  Nothing was BACKING it.  Color Coins suggest BACKING and exchangeability, thus you've removed zero trust AND you can safely remove the technological zero-trust(POW) from the equation as well.  This is what has been done with Confidence Chains.

Peer-to-Peer Asset Issuance And Transactions With Confidence Chains:

https://docs.google.com/file/d/0BwUFHE6KYsM0ZkxLVmFwbXQ3ck0/edit?usp=sharing

Really couldn't digest it all clearly but does this use blockchains other than the Bitcoin blockchain? The marvelous thing about bitcoin is that you have MASSIVE amounts of hardware backing its security of the blockchain and verification system. I enjoy colored coins because it takes advantage of the bitcoin blockchain which should be the protocol from which system can be built upon.

It does use block chains similar to Bitcoin.  It DOES NOT use THE BLOCKCHAIN- this seems to be the point of departure between Confidence Chains and the other technologies in this class.

There are problems with using the BTC Blockchain for other purposes.  For instance Meni Rosenfeld posted a video recently where one of the speakers claims that the blockchain is 'free'.  It's not free, and that seems to be a common misperception, and this thinking is what led to the problems of COIN DUST.  When you start to use the Blockchain for all sorts of things(perhaps some clearly abusive others are useful), than this will greatly magnify this problem of what is permissible use of the block chain and what is not.  It also suggests some very complex problems about the economics of mining.  In addition complex financial functions require judgement- how will we implement that using the blockchain?  Already this group has demonstrated a lack of vision in this department.  It was quite obvious that microtransactions would be a problem however the term did not even appear on the list until I brought it up.

Clearly the public has not fully grasped what Confidence Chains is.  I often get emails asking how someone can mine Confidence Chains for profit.  note: there is no mining in Confidence Chains. :)

It's a major departure from the concept of Bitcoin.  A break with Bitcoin ideas is appropriate when you start to venture into the world of financial instruments.  Re. some of the other projects, Im instantly wary of any project that wants me to buy some of their credits up front for some awesome feature in the future(Ripple Redux?).  As soon as someone defines some kind of requirement, we get a dozen people log in here and post some new project that claims to have a solution.

Exactly, it is Bitcoin. So if something happens to Bitcoin what happens to your stock?
If something happens to Bitcoin then Mastercoin can just use another blockchain. If something happens to Bitcoin then Bitshares has it's own blockchain. Colored Coin has no alternative so if something happens to Bitcoin such as if it gets politically attacked, or if there is some problem with it found it will affect Colored Coin because ColoredCoin is not platform independent.

Unless you are a business oriented individual are prone to believe that Bitcoin will be the only cryptocurrency, that Bitcoin will be the final cryptocurrency, and that whatever your doing should die with Bitcoin, then perhaps it's in your self interest to diversify.

For that reason if I had to choose between Colored Coin and Mastercoin I would choose Mastercoin. Between Colored Coin and Bitshares I would choose Bitshares.

Additionally I would choose Mastercoin because I think you need a unit of measurement. For example the amount of energy in the universe is the same from the big bang right now and it never changes. Energy is never created or destroyed. This gives us the only sense of stability we have in this universe and allows for all the laws of physics, structure, and clarity in the electromagnetic spectrum.

Bitcoin in my opinion is not a good foundation from which to build a unit of measurement because it's still in an inflationary period. Mastercoin is in an inflationary period too but we know exactly the rate that Mastercoins will be created and the bonus Mastercoins wont create any volatility because they'll be used for development and we are talking an nominal amount.

So for our purposes Mastercoin will be fixed in time/space, will become very stable, and will serve as a good unit of measurement. I don't believe Bitshares will be able to do this as well because it too will be mined, but I think at least with Bitshares that mining will provide redundancy and diversification. I think redundancy and diversification are good for the long term security of cryptocurrencies in general because if someone could destroy the Bitcoin blockchain they would not destroy Bitshares or Mastercoin but that would destroy ColoredCoin's Bitcoin implementation.

There is a way around this which involves implementing ColoredCoin on Litecoin, Primecoin, PPCoin and Freicoin. I think if it's implemented on enough altcoins then you could theoretically have redundancy but then you would have the problem of volatility and all these separate implementations would run any chances of trying to use it as a standard unit of measurement.

How many atoms exist? Well if the number changes depending on how you look at it then it's impossible to form any includes on anything in the universe. That number has to be fixed, set in stone, unchanging, and then we can say gold has an atomic weight of 196.966569. We know gold has 79 neutrons. We know where gold rests within the 10^78 atoms in the visible universe and that says something.

ColoredCoin wont be able to do that because it's not ever going to be a precise measure of the value of something else because it's abstract (Bitcoins posing as ColoredCoins) rather than something concrete (set in stone). If I ask how many ColoredCoins will exist on the Bitcoin blockchain no one can tell me that answer. If we assume every Bitcoin can also be a Colored Coin that is the closest thing to an answer I could come up with.

If I ask how many Mastercoins will exist in the Bitcoin universe the exact measurement is 619478.59338440. This number will not change and cannot change ever.

Knowing this and knowing that most of the Mastercoins that shall exist came into existence instantaneously, it can become very stable. If you want to know how many atoms are in an oz of gold you can ask, and if you want to know how many Mastercoins are in goldcoins you can find that out as well. The amount of Mastercoins which make up a gold coin is critical for measuring the value backing the gold coin escrow. The gold in their vault might or might not exist but we will know the value in their escrow exists.

This is why Mastercoin relies on escrow. You don't have to trust the issuer but the system definitely works better if you can. The other scheme is contract for difference which doesn't require any trust at all except in mathematics.

Mastercoin all the way

Haha.

Anyone care to comment on the difference between bitshares and mastercoin?  I just don't have the time to look into it myself at the moment.

I get the clear impression that practically no one here is actually reading these papers, or even has the background knowledge to determine if they are valid or not.

Let's say governments decide to centralize the mining function in the Bitcoin blockchain and gain control of it? That is just one attack. There could be exploits as well against Bitcoin, DDOS against the blockchain, or political attacks all which would stop Bitcoin but wouldn't stop Mastercoin. Mastercoin could work over any blockchain which means if something happens to Bitcoin or if Bitcoin somehow proves itself not to be technologically superior then Mastercoin wont be held up.

For instance the MAX_BLOCK_SIZE problem will be an issue with ColoredCoin but is not an issue with Mastercoin or Bitshares.
Of course, but it's also wise not to be limited to any specific infrastructure. We don't want Bitcoin to become too big to fail.


But how is the price of a satoshi concrete when the price of a Bitcoin is rising, while Bitcoins are being generated continuously, there is no way you can tell me what the price of a satoshi will be and it has nothing to do with the businesses behind it. We don't know because of other variables like mining, influence from institutional investment, speculators, government policies, there are a lot of reasons why we don't know what the price of a satoshi is.

Mastercoin is a messaging protocol layer built on top of a blockchain (the Bitcoin blockchain at this time). It's more than a mere coin. It's an economy onto itself while a coin is just a unit of account.

The beauty of Mastercoin is what you'll be enabled to do with it. If ColoredCoin enables us to do all the same stuff then we'll just have both. But at this point in time Mastercoin has the momentum and is in the lead. It's not like all of these solutions will implement all their features at the same time so one will be first in a certain area making us use that while another will be first in another area making us use that. We will have to use them all if they market themselves right and compete on innovation.

Trying to use propaganda, or claim that Mastercoin can't work, I don't see that. Not only do I see Mastercoin as being potentially successful but I can already point to some successes. When it can do what we all want it to do then it will dramatically improve the economy for us all and that includes the people who promote ColoredCoins.

ColoredCoins are not a bad idea, but if it were such a powerful and elegant idea then where is the proof? Where is the decentralized exchange with smart property and user currencies? Talk is cheap. Produce the code.

That's not lost on me... However I think there is still enough going for the system even if we use it to represent backed assets. Of course, there may be better ways to achieve the goal.

I think many in this neck of the woods can't see the forest for the trees.  They're stuck in Bitcoin methodologies when clearly we've departed from the problems Bitcoin attempted to solve(that of 'zero trust').  The solution to these problems is very simple, does not require expensive mining, and can provide a basis for a lot of powerful features.

https://docs.google.com/file/d/0BwUFHE6KYsM0ZkxLVmFwbXQ3ck0/edit?usp=sharing

In the Mastercoin dev thread, it is being admitted that the more order types there are, the harder it is to differentiate them. This is what I call a protocol-stuffing problem, and it results from trying to piggyback on Bitcoin.

So, the brilliant solution? You guessed it, they want to have an API that is a WEBSITE call, to differentiate transactions. Is that the smell of becoming CENTRALIZED I sniff? Oh my, it certainly is.

When you have to TRUST a CENTRAL server to tell you what your TRANSACTIONS are, you're pretty much boned. A+ for effort, though.

Trust the dev team  to fix all those little minor problems.

Money for bountys is now $1.7M...

Before end of the contest, you'll see amazing feature coming !

The project is not very technically rigorous.  I'm surprised that more people haven't pointed that out yet.

Rather than complain in a snobbish manner about everyone else's project why don't you crowd fund your own project so we can contribute to and work on your more rigorous technical solution?

I look forward to seeing the source code.

My opinion on the centralization problem is that the purpose behind decentralization is to protect the protocol and participants from compromise. Bittorrent is sufficiently decentralized even though websites such as the PirateBay are used. This is because as soon as one of these websites are shut down another can replace it.

Mirroring can solve a lot of problems. The solution used by Linux distributions (repositories) can solve it, the point is you can have sufficient decentralization using the web. Whether or not they will find the right balance is yet to be seen, but it is a balance between convenience, usability and decentralization.

It's far from being dead. Colored Coins is already implemented in Nxt. Right now I'm reading a specification of a decentralized exchange based on Colored Coins. Server-side is ready, client-side will be ready in a week.

Well, since I'm not an ego-obsessed developer, I'd rather not try to stuff the blockchain with an inferior alt-coin implementation pretending to NOT be a get-rich-quick-scheme. Some people, however, aren't able to restrain themselves, and I'll gleefully point out every single flaw as this clusterfuck-alt-coin progresses.

I can't wait to see what they put out in the future to undermine their own efforts. The centralization of contract verification is a sweet, sweet dessert though, I may need a bit of a nap to digest that succulent pastry of failure.

It is a common misconception that Mastercoin is a technology.

Mastercoin isn't a technology. It is a DAC (https://en.bitcoin.it/wiki/Decentralized_Autonomous_Corporation) with the goal of building a Forex/value exchange/betting/prediction market.

The technology stack can easily be swapped out under Mastercoin (proof is left for the reader. There's a bounty (https://trello.com/c/2PiTRxy7/22-document-a-rough-plan-to-migrating-off-the-bitcoin-blockchain-into-a-new-altchain)).

Mastercoin is premined shit that will never be a success.

Your understanding of cryptocurrency is clear.  You and your people should stick with Litecoin where you can flourish amongst your peers.

this 'misCONception' might have something to do with what is written at http://Mastercoin.org, registered to Ron Gross somewhere near Technion University.

http://media.funlol.com/content/img/retard-kitty.jpg

Yeah, I'm done watching this thread.
If you want to reach me, you know how.

I'll be in my office.  hold my calls.

What an enlightening comment!

I found it rather informative.

Holy crap guys. I have read this whole thread, the whitepaper(as best I could), the website, and I have read the mastercoin subreddit. I still have no fucking clue as to why I should use mastercoin over coloredcoin other than it seems that the colored coin project is dead.

Forget investing, I can't even understand the difference besides that one seems to be a pre-mined (unless I am mistaken) ledger which doesn't depend on bitcoin for its transactions and can be used on another blockchain if need be.


#1 This did not answer the question of why you would use Mastercoin vs a mastercoin copycat to offer an IPO.

#2 How are you claiming that mastercoin will have a stable value? It seems like the value of Mastercoin is rising rapidly atm. Are you saying that the contracts will be stable? Why does that offer something a volatile copycat cannot provide if the contract's value is independent of the value of the currency?

#3 I don't know, why would I use Mastercoin at all?

I don't understand the niche of Mastercoin at all. Bitcoin has the first mover advantage and it has an obvious deflationary nature. Mastercoin seems to be based on the value of the contracts and securities it represents. Why does that give it value? Can't contracts and securities be moved to another ledger? Why not?

I like the idea but I don't see why it is so valuable/scarce/un-copyable. I am sure that this concept will come to fruition but why is Mastercoin where the buck stops?

Not remotely.

Good to know ;D

How does one get MasterCoins? Is there a QT ?

what happens to open transaction

That's why iXcoin ( alt coin created in 2011 ) may in fact be a more economically viable alternative to hosting contracts and securities than master coin.

iXcoin already has 1/3rd the hash rate of Bitcoin (via merge mining), so the blockchain is quite secure.

Now as for the value of the contracts and securities,   does it matter if these are printed on gold or on paper?

Likely to be incorporated into the iXcoin ecosystem to handle advanced financial instruments.

Open-Transactions is the project that's actually going to work.

It's actually going to incorporate colored coins as a way of adding certain features that the libraries to not currently support.

What happens in this case? Will the price of iXcoin rise? Rise significantly?

it does seem ixcoin falls into the prebuilt solution that will be better than master coin or maybe even IOCOIN

Unlike a mastercoin implementation,  a colored coin implementation consumes coins proportional to the number of coins issued.

In other words, say I need to create 20 million shares of a company stock,  to do that we colored coins using iXcoin as the block chain, I would need to allocate 20 million x 1,000 satoshis = 20 IXC.   So, as more financial contracts employ iXcoin, the demand for IXC goes up and the supply gets reduced.

A mastercoin  implementation by contrast allocates the same amount of bitcoin regardless of how many contracts are issued.  In other words, the underlying coin does not benefit from the introduction of mastercoin.  In fact, there is no correlation of the reduction of supply as mastercoin is used to create financial instruments.  In other words,  I can use 10 mastercoins or 1000 mastercoin to represent 20 million shares.  Does not make a difference!

It will be hard to fortell if it would be better.  All that is know is that it will be based on more mature technology.

In the world of financial instruments,  it is better to err on the side of maturity over sophistication.

Will there be enough Ixcoins in the future in case colored coins via this blockchain get super popular?

I've read everything you've said and i'm thinking of buying couple of hundred coins as a hedge and because i see some logic to your arguments.

Also, why would some there be a need for just one big player? Isn't there room for more of these protocols? Some companies, financial institutions might prefer colored coins, some might use NXT, others Mastercoins?

There is a cap of 21 million iXcoins.   Your question is like asking,  is 21 million bitcoins enough?  Supply and demand affects price.

  If you have this layered protocol like mastercoin or colored coin,  one would expect that there was a 'toll'  for using this layered protocol.  With mastercoin there is no toll collected either by bitcoin or benefiting mastercoin.  So I fail to see any supply/demand dynamics for mastercoin.

 To be clear,  why would I need more than 1,000 mastercoins when the functionality available for 1 mastercoin can do the same?  There is no 'conservation of money' in the entire scheme!  There is absolutely zero scarcity!  Economics works on the presence of scarcity, without it, all pricing goes to zero.

With the iXcoin approach we preserve the value of a coin.  Printing 1 million of a company shares costs more than printing 10,000 shares.   Building a system that is completely devoid of cost doesn't make sense.  iXcoin is still merged mine, so there is a cost for every coin minted.  There is no cost for some guy to come up with his own 'exodus address' in mastercoin.

The www.ixcoin.co  will be updated to reflect the new strategy of iXcoin. 

   

Yes, it's going to be a competitive environment in this space.