He (Coinsigner) posted on the forums saying he canceled his patent application.
Anyway look deeper into it. It's an ongoing project and the patent was mostly supposed to be for defense purposes to keep Apple from trying to patent it like they are doing with iMoney.

https://bitcointalk.org/index.php?action=profile;u=136127

Lets say the Mastercoin protocol works as described and we have both smart property and user currencies.

You would have two ways which you could transfer virtual property. If it's infinitely duplicated property like an mp3 or a limited but known supply game or game item then read below:

The easiest way would be to turn virtual property into a voucher which can be redeemed. Under Mastercoin you would want to use the user currency issuing capability to issue a voucher in the name of the virtual property you wish to transfer. You set the amount of units of these vouchers as if they are currency. You then sell each voucher for Mastercoins. These vouchers can represent anything virtual and be redeemed.

Production can be tracked as a data stream so that people purchasing know the progress you are making on the game if it's a game and they are pre-ordering. Participants will be able to bet on whether or not you'll meet your release date offering them a speculation opportunity.

Those who have your vouchers will be able to redeem those vouchers in exchange for a copy of the virtual property if they redeem by a certain expiration date meant to protect both them and you. So you can set the voucher to be redeemed within a six month time period and this will keep people from hoarding vouchers they don't really want and force them to swap vouchers until the people who really want your game are in possession of the vouchers at the time before the vouchers expire.

These vouchers can be traded for the game and then you release the decryption key to the lockbox allowing all who redeem to play the game.

Mastercoin will make it very easy to do stuff like this on a decentralized exchange.

One other way to do it is to use the smart property functionality. If it's a single product then you can digitally label with a unique currency id for that product and trade it for Mastercoins. The number of properties should be set to 1 because only 1 of that property is in existence.

Technical details:
Mastercoins are a unit of measurement, not a currency or stock.
The Mastercoins are used to measure the value of an escrow and to control supply and demand of user issued currencies. Mastercoins in escrow represent the goods and services of the issuer at the time because Mastercoins are backed by the goods and services of the issuers in the decentralized market.
When an issuer issues a currency, the price if it's for example a bitUSD it would rely on a data stream feeding it the price of USD and the supply can be increased in order to decrease the price, while the supply of the currency decreased (bitUSD transforms back into Mastercoins and bitUSD are destroyed) to increase the scarcity and increase the price. As a result the Mastercoin escow is actually a scale and is designed to keep the price of the issued currency stable in response to changes in demand for that currency and according to the data stream. So if your game is approximately $60 then it creates more vouchers if they sell out so that the price of those vouchers is stable. If that didn't happen then people would be buying and selling vouchers like a stock and the price would go up and down similar to how Bitcoin does.

The escrow keeps the price in a strict range using Mastercoins. For this  reason Mastercoins are a unit of measurement and not a currency.


More on Mastercoin
http://www.mastercoin.org/
https://sites.google.com/site/2ndbtcwpaper/

Elaborate on how a pseudo-anonymous reputation system could be abused?

You mean if someone is trusted through a long duration of time and then randomly pulls the plug on everyone? I am not sure anything can be done to avoid that possibility but here is a solution.

If it's Mastercoin and someone is issuing a currency, voucher, credit coin, we should prefer the issuers with higher community trust ratings and we should prefer the issuers who issue with an expiration date during which time anyone can send the currency or credit back to the issuer to have it redeemed.

The longer the period of time we have to trust an issuer the more dangerous it is.
At the same time the issuer would have a lot to gain by having expiration dates because whatever products or services they are using to back their credit coin or voucher can be redeemed in a time frame they can choose and plan for.

The only potential for abuse would be if the issuer decides not to make good on their promise to deliver their goods and services. If they don't redeem the vouchers for their goods and services then everyone loses. I don't have a solution to that because a lot of small businesses fail even if they don't intend to. And some are just really late like with BFL.


I never said rely on a "trusted authority". We have to develop a decentralized reputation system to overlay on top of the decentralized market place. Every trade represents a level of risk and we want to try to at least mitigate those risks and make trading predictable enough so that it can be an automated market place. Even if the market place is automated you still have to be able to trust that when you redeem a credit for a Yubikey that the Yubikey will be delivered. You basically have to trust the producer Yubico will honor that credit and you're trusting them based on the fact that they've done thousands of trades just like yours and every trade has delivered. It's always possible that when it's pseudo-anonymous Yubico could decide not to honor their contract and redeem.

This can be solved for digital products. If it's a movie or book you can set it up so that it's completely automated and as trustworthy as the blockchain and source code. It would simply be a matter of uploading that digital product to a sort of lockbox which is encrypted and the decryption keys get sent to everyone who redeems.

We can use get around this problem is by using the gift cards/credit. For digital products those cards would be very trustworthy. If you want Pizza and you deal with a Pizza credit it's not so trustworthy anymore because you don't know with 100% certainty that the Pizza company will redeem the credits.

Coinsigner offers a potential solution they are calling a scalable dispute resolution system. I think this approach has a lot of potential to work and I've invested in their idea because I believe it or some variation on it will have to be developed.

Here is a visual of how it works:


So my opinion is:
If it's going to be pseudo-anonymous then it will only work well for digital goods and services. For digital goods and services you can have trust that the moment you buy the credits that they'll be redeemable to the issuer in an automated fashion. You send the credit coin/voucher to the issuer, and you get your digital item.

Pseudo-anonymity when applied to physical goods doesn't work so well. I can't be 100% certain that they'll ship the product to me because I don't know who I'm dealing with. I could be dealing with scammers, organized crime or anything and I could have no guarantee that I'll receive what I paid for.

The possible way to solve it while preserving the most privacy seems to be with Coinsigner. All trades go through just fine unless there is a dispute and if there is a dispute then pseudo-anonymous mediators act as the jury and judge to make a judgment on resolving the dispute. Each mediator is rated and gets paid according to how many successfully resolved disputes they have, they are basically the referees of the system.

Visual example:

The alternative to something like Coinsigner is to require that the issuers are never anonymous and that everyone knows who they are and what they are. I think for most issuers it will be better to just start a corporation, list yourself on the exchange as a corporation, give out the names and addresses of the people involved, and use the current legal system to deal with disputes. This would work fine for most issuers who issue private currencies. It probably wont work for sole proprietors offering services such as physical Bitcoins for example. They may be completely trusted by the community, but they might not have enough money to register all the paperwork to form a legal entity to protect themselves. These sorts of issuers may want to remain pseudo-anonymous and we may want them to remain pseudo-anonymous as well.

More on Coinsigner
http://www.coinsigner.com/Howitworks.html

Establishing trust in a decentralized market

Any decentralized exchange such as Mastercoin or Coloredcoin or Bitshares will require the ability for pseudo-anonymous rating and reputation systems on issuers. This advance could help to establish trust. Does anyone have ideas on how to do this in a decentralized market environment?

If someone is selling something in a decentralized manner then trust is everything because there is no central regulator. This is the main problem which needs to be solved.

The reason I chose the smart phone solution is because it's convenient and easy so I think most people would use it. You're right that it could possibly have a backdoor and I hadn't considered that. The SQRL implementation probably should be modified in some way but I do think it's great if people don't have to remember any sort of password because that has security advantages too.

There are scenarios where the person might not want to remember their password. There is also no way to type a password in. So upon reflecting on your suggestions I think the Trezor could act as a security key because it actually does secure the Bitcoin wallet in perhaps the safest and most thoughtful way. It uses multi-factor authentication which is good.

The only problem I have with passwords is that they have to be typed in. If Trezor can handle that then they don't even have to be typed in anymore so it's worth contemplating. I'm not saying you should change how Keyhotee works, only offering some alternative ideas in an attempt to improve upon something I already consider to be pretty good.

Here are some relevant threads and articles:
https://bitcointalk.org/index.php?topic=310282.0
http://www.reddit.com/r/Bitcoin/comments/1nkoju/bitcoin_core_dev_websites_do_not_need_passwords/

Somewhere between 0.08 and 0.1.
https://bitcointalk.org/index.php?topic=287145.0


If you have a Bitcoin address that becomes your Mastercoin address.

I suggest you implement SQRL ASAP. It's better than a password by far and it's simple. Please avoid using passwords.

http://www.techrepublic.com/blog/it-security/sqrl-a-new-method-of-authentication-with-qr-codes/
https://www.grc.com/sqrl/sqrl.htm

The exchange rate isn't between Mastercoins and Bitcoins. The exchange rate doesn't really matter. What matters is if you're an issuer do you want to be able to issue your own credits and allow people to buy those credits from you on a decentralized anonymous marketplace? Any business owner should be saying "HELL YEAH". Every business owner will want to issue hundreds of these user credits for all sorts of products they offer.

Mastercoin is almost like the domain name system, it will allow you to literally issue your corporation specific product as a coin. So you could literally issue Gatorade credit coin and anyone who loves Gatorade will be able to get cases of it shipped directly to them by swapping their Valve credit coins. Now the person with too many Gatorade credits can have some Valve credits and the person with too many Valve credits can have some Gatorade credits. WIN/WIN!
I'm trying to explain that Mastercoin is directly backed by the goods and services of the issuers. Not by the miners like with Bitcoin. Miners don't offer any goods and services and that is why Bitcoin is having to find ways to allow people to bring fiat into it because people actually work for fiat and then buy Bitcoins. Mastercoin is entirely different because your corporation will issue it's own currency and you'll work for Valve coins or Sony credits. Those credits will be backed by the actual value in the global economy of the goods and services offered by Valve and Sony to society. That is what Mastercoin can do and why Mastercoin will be immensely more valuable than most people think. All those gift cards, Amazon coin, Netflix credits, on all those different corporate sites? All of it will be on Mastercoin. All Amazon would have to do is issue their Amazon coin on Mastercoin or someone else can do it on their behalf and then they'll simply buy a bunch of Amazon coins with USD and sell them to the decentralized exchange or Amazon themselves will be issuing their own coins for Mastercoin so that they can use those Mastercoins to trade for some goods and services their business needs to run.

What this means is trade will be directly business to business and product to product in the form of swapping coins, credits, vouchers etc. If you add on the ability to have adjustable expiration dates then the issuers can actually cause those holding their coins, credits and vouchers to redeem them by a certain date which will force swapping and trading to take place on the decentralized exchange.

Because people aren't going to be buying Mastercoins with their USD to turn them into Bitcoins. People will be buying giftcards with their USD which expire and if they decide they want to redeem that giftcard before it expires then they'll have to sell it back to the issuer for Mastercoins. Through that mechanism Mastercoins could be sold in any store where you see giftcards.

All of the above is correct. I don't dispute any of it.



This is correct and it is essential that Mastercoins aren't mined and that the amount of them is stable because it's exactly the block reward halving, mining, inflation and other features of Bitcoin which create the volatility. Mastercoin is meant to function as a unit of measurement and it does not exist for anything else.

Agreed that was a bad analogy but it was marketing and it did the job of getting half a million dollars give or take for crowd funding.

Mastercoins are not a currency and this is where you got it all wrong. It's a unit of measurement.
So no it's not traded like "any other currency" because Mastercoins aren't a currency.

This is partially true. It's actually the usefulness of the decentralized exchange which matters, the usefulness of the functionality of Mastercoin which matters and Mastercoin functions as a unit of measurement not a currency.

The main thing that Mastercoin needs to have in order to be independent from Bitcoin is to give users an ability to buy Mastercoins with their national currencies. So basically once the Mastercoin exchange is up then Coinbase or any other company can form to come along and allow people to buy Mastercoins indirectly by purchasing their Mastercoin gift cards.

It would work like this:
1. I'm a business and I buy 1000 Mastercoins.
2. I now issue my private currency in Mastercoin which I'll call a corporate voucher.
3. This corporate voucher can be redeemed for goods and services from my corporation just like a gift card or corporate credits.
4. The corporate voucher has an expiration date on it which means it expires after a certain date forcing you to use it, swap it, or send it back to the issuer by that date at which it becomes invalid.
5. If you send it back to the issuer before the expiration date then you get some Mastercoins which you can then use to buy any gift card, credit, voucher or currency from any other issuer.
6. The value of the gift card, credit, voucher or currency is backed by the goods and services of the issuer and can at any time before the expiration date be redeemed for those goods and services.

Of course it's a protocol. When did anyone say it wasn't?
It can be easily cloned but that doesn't make the clone useful. If all the issuers are using Mastercoin and if you can buy Mastercoins with national currencies because businesses and markets are set up to allow it but you cannot do the same with the clones then what good are the clones? Mastercoin is only as useful as the size of the market. It's all about the issuers really and they'll decide whether Mastercoin or the clone will be a success. If I'm running a business and I'm offering my credits through Mastercoin then you'll be dealing with Mastercoin and not the clone. My currency once issued through Mastercoin would cost me more money to issue it on a clone of Mastercoin so why exactly would I pay twice?

If you're talking about Colored Coin then for sure I could issue it over Bitcoin but then I don't see how Colored Coin can do units of credit, gift cards or vouchers. If I have to buy a bunch of Bitcoins then it's really no different than if I have to buy a bunch of Mastercoins and in fact it's worse because me buying a bunch of Bitcoins will create volatility in the Bitcoin price for people trying to use Bitcoin as a currency and not as some sort of store of value or unit of measurement. All of that on top of the fact that Bitcoins are still being generated by miners and that the block reward will halve while all the Mastercoins that ever need to exist are mostly already in existance. Mastercoin is set to be far more stable because there is no reason for it to inflate or deflate and even if it did the price of Mastercoins in USD already is beyond 1:1 with the dollar. It started out as 1:1 with the dollar at something like 0.01 BTC per Mastercoin and now it's around 0.1. The problem with pricing it in Bitcoin is that Bitcoin isn't even stable and introduces too much volatility to Mastercoin so the solution is for Mastercoin and all it's future clones to be backed directly by the national currencies. You'll purchase Mastercoin (and whatever clone) with your national currency either directly from a Mastercoin ATM machine or indirectly from an issuer by trading in your voucher. The issuer themselves would have to purchase the Mastercoins aleviating the need of users to have to directly purchase them. Instead as a user you'd purchase a Walmart gift card and then trade it in for Mastercoins or if you have Mastercoins trade it back for the Walmart gift card.

So yes you can do a completely decentralized exchange where people buy the giftcards in local stores and then trade them decentralized on the Internet. The cash would be exchanged at the business issuing the Mastercoins. You'd buy either a voucher or swap a voucher for Mastercoins.

Why is it flawed? Explain.
Mastercoin is backed by issuers. Anyone who owns Mastercoins can be an issuer. Issuers have a strong incentive to stick with whatever they are using. So if you have Mastercoins already you probably don't have a good reason to switch. If you've already issued your currency, credits or vouchers in Mastercoin why would you now have to go to a new ATM machine and buy Clonecoin with your USD so you can issue your currencies again? It makes no sense. If Mastercoin works I can tell you I wont have any reason to use anything else unless something else truly works better and from what I know about Mastercoin if it works it will solve even more long existing problems than Bitcoin does.

Colored Coin is an alternative and truthfully we'll probably be using some combination of both Colored Coin and Mastercoin. But to believe Mastercoin is somehow vulnerable to being cloned and to think issuers are going to go along with the clone is silly. If you were issuing corporate credits and doing good business on Mastercoin or if you're the business who started the Mastercoin ATM then why would you care about some clone? You'll stick with what you already have unless the clone is offering new functionality.

Not quite. When web standards changed but every website on the Internet used the old standards do you think they'll just break all the old sites? The only reason to break old functionality would be to offer newer and better functionality. If a new Masterclone comes along offering the exact same functionality minus the compatibility why would anyone want it? It would be like exotic web browsers which don't follow the mainstream web standards or offer any new functionality so not only will your favorite websites not work, but you'll have to download two browsers and essentially pay twice.

That is because BTC and LTC are units of account and not designated as units of measurement. The price of BTC and LTC matters to speculators. Mastercoin isn't designed for speculation or as a currency but as a unit of measurement. You can easily create BTC or LTC on top of it and it would have the exact same exchange rate and value provided that its backed sufficiently in escrow around 3:1.

I agree it will be competition by features only and that is very good for us. Issuers and users both benefit from new features. The point is we wont want to pay for a competing product which has the exact same features.
I predict Colored Coin and Mastercoin will both survive. I don't predict anything will easily threaten them once the decentralized exchanges and user currencies become popular. At that point we'll all be issuing currencies and we will prefer Colored Coin, Mastercoin or perhaps we'll be using both. It will be Internet Explorer and Netscape. Later on there might be some newcomers which try to duplicate these two but early on it's Colored Coin and Mastercoin which will dominate. So while I cannot tell you which one you should use I can say you will be wise to choose one or both as an issuer.
If you understand what it is as a unit of measurement why do you continue calling it a currency? Mastercoin is not a currency and never claims to be a currency. No one is going to buy a Pizza from a store with Mastercoins. Instead you'll buy Domino's Pizza vouchers from some random anonymous person on a decentralized exchange with your Mastercoins and then you'll go to Domino's Pizza to redeem your Pizza voucher. That means Mastercoin is not a currency, it's Domino's Pizza voucher which is the currency and there is no way Bitcoin will be able to compete with that.

When Domino's has to choose between which currency to value the most, Bitcoin, USD, or Domino's credit vouchers, they'll always value their Domino's credit vouchers the most. That would mean we will always have the best deals using Mastercoins, better deals than with USD or Bitcoin. Colored Coin might be able to do this too but with a drawback, it will make people buy Bitcoins to such an extent that Bitcoins may go up to $100,000 but then it could crash down again to $150. That extreme volatility comes form miners generating new coins and when the price shoots up like that they'll probably sell their coins for USD crashing it down. Mastercoins don't have to be sold for USD because Mastercoins can become USD which defeats the whole purpose of anyone selling them for USD.

You make it sound like issuers are going to decide to switch over for the same functionality. If you're the issuer and you're selling Pizzas using your Pizza Coin which you are backing with your goods and services, and Mastercoins are already purchased with national currencies allowing you to feel safe about it, why would you go onto a new uncertain clone where there aren't any Mastercoin ATM machines and most importantly there isn't a market place of other issuers who you can swap your credits with? If you cannot swap vouchers, credits and currencies then what is the point? If I cannot take my credits over to the Mastercoin clone and redeem them there then what is the point? I worked for my credits and I want a Pizza, but there is no Pizza issuer on that clone so I can't get Pizza and the only thing the clone is offering is to start all over again as an employee. BAD DEAL.

Competition is good but I don't think Mastercoin has much to fear from competition if it works because if it works then we'll all have greater access to goods and services and a market cap in the trillions.

It's possible we will switch to something better than Bitcoin as well, but when things are good and everything works for everybody I don't see any reason why people would have an incentive to.

The functionality of Mastercoin isn't being sacrificed. What the hell are you talking about?

Why would I want to raise funds in Bitcoin when I can raise funds with USD? Most people have USD. Mastercoin can leverage USD so that people don't even have to interact with Bitcoins. Literally you could go into a store and buy a giftcard and it could be backed by Mastercoin and not even have to know it. You could sell that giftcard on the decentralized exchange for Mastercoins or you could buy giftcards for Mastercoins. People could purchase giftcards for USD which solves the fiat to Mastercoin.

Any issuer can produce a giftcard backed by Mastercoins. If you're doing crowdfunding all you would have to do is issue a gift card or vouchers which can be redeemed based on the amount of USD pledged. Those vouchers could be redeemed for Mastercoins.

Example:
If you pledge $50 you get 0.05 Mastercoins plus whatever other gifts.
If you pledge $100 you get 0.1 Mastercoins plus whatever other gifts.
If you pledge $1000 you get 1 Mastercoin plus whatever other gifts.

Suddenly you now have the ability to crowd fund with USD on kickstarter and offer Mastercoins as the gift which allows people to essentially possess Mastercoins. Later on they can use those Mastercoins to buy whatever giftcards they want or they could stick with your voucher and get the gifts you offer by sending the Mastercoins back to you the issuer when you have some product or service they require or want. They could then get a voucher for that product or service which they could then trade in an automated market place with other people who are doing the same kind of thing and swap vouchers between various startups and other businesses so that everyone gets exactly what they want when they want.

But Bitcoin is a currency and not very stable. Why would I buy Bitcoin to put my value in that when I can just stick with USD? With Mastercoin as it's being developed now, if it works then I could never have to even buy Bitcoins. I could just buy Mastercoins directly, or buy vouchers which can be redeemed for Mastercoins. I don't have to care about the value of Bitcoins and that actually provides a massive amount of stability to Bitcoin because people with Bitcoins will be able ot benefit from the stability of Mastercoin. It's possible Mastercoin will be unstable but when you don't have miners, you don't have to worry about hoarders or scarcity affecting the market place, no one really will care all that much about the price of Mastercoin to Bitcoin because the only price that matters is the price of Mastercoin to their local national currency. That price can at least to my understanding be kept absolutely stable. So if $1 is always $1 when I'm in the Mastercoin economy then I just purchase $1000 worth of Mastercoins and I receive however many Mastercoins that is. I'm not a speculator I'm a shopper. If I'm an issuer then I don't really care about the dollar because I'm issuing my own currency and my employees are earning my credit coins, gift cards, and various vouchers which can be traded with other businesses for whatever my employees need. So as long as my business is making a profit and providing valuable goods and services to the market, then my credit coin will be directly backed by the quality and value of my goods and services and not BTC or USD. Mastercoin is merely a unit of measurement to allow me to compare the value of my businesses goods and services with every other.


I think you're not really understanding the dramatic paradigm shifting which will occur once we have user issued credit and an automated decentralized exchange. When we have that then there is no need to care about the price of BTC, the price of the USD or any of that because people will be working for user issued credits which will be redeemed the exact goods and services they need at any given time.

As long as the decentralized exchanges are populated with businesses offering valuable goods and services there will be great value in having Mastercoins and that value will cause great demand.

Okay thanks, you should receive some Mastercoins in the near future.

You did not follow the instructions of the thread.
Finding the bug enters you into the coding contest while this thread is more for promotional purposes.

Please send a tweet, make a popular reddit or put something about Mastercoin in your signature. This is called paying it forward because Mastercoin is only as valuable as the dedication of its users.

I don't agree with it. I think separation from Bitcoin is a good thing when trying to create a unit of measurement because it allows Bitcoin developers to focus on making Bitcoin a unit of account. Bitcoin is not more valuable than Walmart credits if Walmart has a higher market cap and is in greater demand, but with Mastercoin the Walmart corporation can issue their Walmart credits directly to users through Mastercoin. Amazon coin or Google coin through Mastercoin would work just fine over Mastercoin. You or I could also issuer our credits through Mastercoin.

I don't think the price and speculation of Mastercoin is important because it's not something which functions in a way which can be popped easily like Bitcoin can be, because I believe Mastercoin will be backed by real goods and services and not just people putting USD into it as an investment. What matters is the ability to get an abundance of goods and services. The price of the dollar is only of value when compared to the price of something else like gold or silver (which originally backed the dollar). The price is a result of having a unit of measurement. The unit of measurement sets all the prices of all the issuers. What matters for us is to have the ability to issue credits which represent the true value of our goods and services which can be redeemed by someone else while also having a market place where we can access credits which represent the goods and services of anyone else. Goods and services ultimately create the value for Mastercoin (not Bitcoins). Bitcoins are just the transport layer to carry the information which represents the true value which is the goods and services that those credits represent.

If I can buy Google or Walmart credits with my Mastercoins and the Mastercoins somehow are less effective at it then that can be adjusted to make Mastercoin more effective. The price of the Mastercoins in dollars does not matter if I can get the same amount of goods and services.

The value of Mastercoin is what matters and that buying power matters in relation to the redeemed goods and services of issuers, not the credits from issuers. Meaning the Mastercoins are used to allow issuers to issue credits in the first place and any large corporation could issue credits which are more expensive than Bitcoin because price is measured by whatever is backing Mastercoin's escrow and not necessarily exclusively Bitcoin.



I don't believe it to be superior. What Colored Coins will do is cause less people to use Bitcoin as a currency and more people to have to use Bitcoin as a unit of measurement (which it's not designed for and shouldn't do).
Bitcoin is a unit of account, a credit/currency designed by Satoshi and issued by miners. It's not in my opinion going to be capable of being good at being both the unit of measurement and a currency at the same time for the same reason that gold and silver weren't good at being both a unit of measurement and a unit of account at the same time.

We moved from to fiat currency for a good reason, we moved to vouchers for a good reason, it was to move beyond the limits of what gold and silver could do. You couldn't issue virtual gold and virtual silver without a voucher or credit or fiat system to allow you to issue pieces of paper which represent gold or silver. Silver went from being a unit of account to being a unit of measurement and that was one of the greatest changes in the economy because it allowed any shop keeper to issuer their own credits, their own currency, their own voucher backed by their own goods and services with silver being used merely as a measure on the value of their goods and services. Nothing in the economic eco-system was more valuable than gold so gold was used merely in comparison to everything else. My goods and services are valued as 20 pieces of gold, 20 pieces of gold is relatively stable and does not change drastically, so we can use 20 pieces of gold to know exactly how much my goods and services are worth. But when people actually buy my goods and services they use my vouchers, my credits, my currency, not 20 pieces of gold.

Bitcoin could try to take on the functionality of gold but it's hard for Bitcoin to be programmed to function like gold while also allowing it to function like a currency. It's basically saying that Bitcoin will be divided in such a way that on the one hand you will have a perpetual coin (Bitcoin), but also a credit coin (user currency), and that Bitcoin will somehow be able to act as a unit of measurement for the credit coin. I'm skeptical that Bitcoin being what it is and the focus development is currently going that it can achieve that.

With Mastercoin the price of Bitcoins does not matter. If you use Colored Coins and the price of Bitcoins were to go down wouldn't that affect everything backed by Bitcoins? That is the problem I can see. The problem being that Bitcoin will be used for too many things and its use as a currency may create instability for it as a unit of measurement while Mastercoin will primarily be a unit of measurement so it does not have the same potential problems trying to be two things at once.

Maybe you see a way around this but when something is supposed to be a unit of measurement its supposed to provide stability but I don't see any way something volatile like Bitcoin can provide stability at this time when it has to be mined, has block reward halving events every 4 years, (I think Proof of Stake might work for stability but Proof of Work actually contributes to the volatility). Theoretically possible, but I don't think it's going to work in practice.

BuyMastercoin if I can redeem my Mastercoins for the products and services offered by the issuer what do I need Bitcoins for? If you're a car company and you offer Ford coins to anyone who has Mastercoins then what exactly would I need Bitcoins for if I'm trying to trade for car products? Okay you're a video game company called Nintendo and you offer Nintendo credits and I have Mastercoins so I trade for those Nintendo credits, so what exactly do I need Bitcoins for? When we have a decentralized market place I can trade Mastercoins for any kind of credits, any kind of currency (including Bitcoins but not limited to Bitcoins). And that is where I think we disagree.

I think Mastercoins do not need the value of Bitcoin because Mastercoins can be redeemed for the goods and services of the issuer. If you issue BuyMasterCoin credits, then anyone who owns Mastercoins could purchase your credits so why would Bitcoins be needed unless you believe Bitcoins are the only valuable form of credit that exists and in that case I don't believe Bitcoin is even as valuable as Visa or Mastercard. I don't think Bitcoin is even as valuable as Ford or Nintendo if you look at the market cap. What I'm saying is that Mastercoin will inherit the value of all the corporate privately issued credit, all the points, all sorts of virtual currencies, gift cards, private currencies, gold. Mastercoin as a protocol will allow the creation of a Local Exchange Trading System or a Community Exchange System. If trade is facilitated decentralized, and anyone can issue credit, there is no need to care about the price of Bitcoin because people will buy Mastercoins with cash the same way people currently buy Bitcoins with cash.

If you're saying right now it's easiest to buy Mastercoins with Bitcoin then sure. In the future corporations will be knocking each other over to issue credits/ gift cards and currencies on top of the Mastercoin protocol and if my understanding is correct they'll need Mastercoins to do it.
It has worked in the past. How do you think the economy used to work? What do you think banks did and how do you think vouchers came about? Originally if we are all business owners in a market then we all have goods and services we want to trade with each other. We cannot use gold or silver coins because those tend to get hoarded, rely on scarcity, and because of that are best used as a unit of measurement rather than as a unit of account. What happened was human beings who wanted to trade with each other first started with barter, but that wasn't very flexible, so they created a unit of account (money) to allow the tracking of cost and price, but the gold and silver form didn't function very well as money because while it could be stored forever that easily stored forever quality also made it easy to hoard.

Hoarded gold and hoarded silver is worthless to the economy. They eventually figured out to use gold and silver as units of measurement and to use trade vouchers and private credit currencies as units of account. So no one really needed to have gold other than to use as escrow to issue private currencies. Now each shop keeper could and did issue their own vouchers. The most valuable and useful vouchers were in the greatest demand, and everyone traded their goods and services for those vouchers. As a result everyone eventually started working for those vouchers. Those vouchers were actually backed by the goods and services of the issuer so if it's a bread voucher it's backed by bread and since everyone has to eat it means the bread voucher was extremely valuable to the economy. The unit of measurement (gold and silver) were only used to provide escrow and produce a price and cost for the goods and services offered by the issuer. The majority of people in the economy did not have to care about the price of gold and silver and did not own much gold and silver as it was used to measure the value of other things against it. A loaf of bread is worth a certain amount of silver, and that amount can increase or decrease by some percentage points, no one really cares the price of gold or silver because if the bread is more expensive then the bread can be redeemed for more gold or silver but if the bread is less expensive then the bread is redeemed for less gold or silver. That is basically what Mastercoin is doing with the user currencies. If the user currency is in high demand then the escrow produces more of them to adjust the supply to meet the demand. If its in less demand then the escrow destroys some of them to adjust.

As long as we can get plenty of bread, we have no reason to care about the price in Mastercoins because eventually you'll be able to trade swap credits/user currencies. If I have too much bread I can trade it for tickets to the concert or anything else I want in the market place.


I think you do not fully understand the implications of the Mastercoin protocol. What Mastercoin is doing is actually old, it's not some new formula just because it's high tech. It's true it's never been done with computers and in a decentralized way, but it has been done before and its not what you think.

Read the specification:
https://e33ec872-a-62cb3a1a-s-sites.googlegroups.com/site/2ndbtcwpaper/MasterCoin%20Specification%201.1.pdf

Obviously you don't understand how Mastercoin works. Silver is cheaper than gold but we still use gold. Why?
No one would prefer silver over gold, but it's so much cheaper so why wouldn't they?

Mastercoin acts as a unit of measurement. The Mastercoin protocol is a formula which functions as a value unit for the user currencies. It's value is not dependent upon it's scarcity because it's not like gold. It's actually more important than gold.

Mastercoin if it works
Once I have a working Mastercoin, I can create any currency I'll ever need and issue it. So why would I need an alt currency to do exactly what I can already do? "Cheaper" and "Expensive" assume Mastercoin is a unit of account when it's actually a unit of measurement, while the user generated currencies are the units of account. Bitcoin is a unit of account and functions as a currency, but you can easily create Bitcoins from Mastercoins so why would I care about the Bitcoin price if I have Mastercoins? I can also use Mastercoins to create currencies with far higher prices than Bitcoins so how exactly would Bitcoin somehow be more expensive than a working Mastercoin?
 
Let me give you an example here, let's say I'm an airline company JetBlue and I decide to create Jet Blue credits using the Mastercoin protocol. Those credits represent the goods and services offered by Jet Blue. So now Jet Blue credits are issued on the Mastercoin protocol backed by Mastercoins purchased by JetBlue which act as a unit of measurement of the goods and services JetBlue has to offer. Mastercoin is not money, and it's not credit, it's a unit of measurement which allows for the creation of money and credit. Money is a unit of account to give you a cost of goods and services, so Bitcoin is money.

Yes you can build a clone of Mastercoin and call it Mastercoin2 but if it has all the exact same features and I can do all the exact same things then it wouldn't even be worth my time to download it. And if you say "you'll download it because it's cheaper", you're missing the point. Mastercoin is useful because of what we can do with it and that is where it gets it's value from. If Jet Blue is offering credits backed by the goods and services of the Jet Blue company, those goods and services are going to be worth a lot to a lot of people. It will not make any sense for those people to go to some fake Mastercoin which isn't issuing JetBlue credits. Jet Blue isn't going to need to go to Mastercoin2 to issue their credits after they issue it over Mastercoin because they'd have to pay twice for the same functionality.

Mastercoin is not a stock. It's not a currency. The purpose of Mastercoin is to act as a unit of measurement, for instance in an escrow. It becomes valuable because people will be using it to do all kinds of trades. A clone isn't going to stop me from using it because I already have Mastercoins. It isn't going to stop the majority of people who have Mastercoins from using it because once you have Mastercoins at any price you have already purchased a stake and if it works you'll be able to use the protocol and it's functionality. Ideally you want to get them for cheap and most of us are at this point in time the earliest of early adopters.

The only way a Bitcoin will be worth the same as a Mastercoin would be if the Bitcoin developers themselves found a way to put all the functionality of Mastercoin into Bitcoin but if they did that it would cripple Bitcoin as a currency because the majority of people would be hoarding Bitcoins to use as escrow or to use in exotic derivative schemes which would affect the people who want to use Bitcoins to do micropayments or small purchases. Mastercoin frees Bitcoin users and developers from having to make that particular choice, at least not for the same reasons.

The Max_Block_Size issue may still cause problems of scalability. Micropayments may still ultimately be a problem if off-chain transactions aren't utilized.

Anyway to end this debate the only change to the specification JR would have to make to promote "brand loyalty" would be to allow the escrow to generate interest for the issuer and it's game over. If the issuer has an incentive to actually put their Mastercoins to use then whoever has Mastercoin owners will be virtually guaranteed to use them. The only way the price could crash down would be if the people who have them don't understand the protocol enough to know how to use them,  or if there is no incentive to get people to use them, or if there is another better technology (possibly Bitshares?) which allows for the same properties.

Colored Coin is a technology but it's design in my opinion is ugly and unnecessarily complicated. Maybe it will work but I don't see how it can work without the value going somewhere. If someone is issuing credit or currencies then it's got to be backed by something somewhere and represented somewhere. If it's backed by Mastercoins then you'd say it's represented by Mastercoins which act as the unit of measurement. If I wanted to issue a currency or credits through Colored Coin then perhaps it's possible but I don't know what their specification is or how they intend to do it. I'll believe it when I see a prototype.

If that happened then you can't say it succeeds. The truth is the value cannot go to zero and it be a success. If anyone copies it, I expect the value of the copy to be even higher than Mastercoin or at least higher than Bitcoin. The real question is why would anyone need or use the copy?

If we already have Mastercoin there is no incentive to buy another Mastercoin2 and start over. There is no incentive to build another Mastercoin if we can do everything we need to do with this protocol.

It may be a case where you have competitor products and they all are going for 2-3 BTC each and that could be what keeps Mastercoin from reaching 20-30 BTC each but so what? Just making a clone doesn't mean people will download your clone.

If I want to issue a currency or make a bet what incentive do I have to use Mastercoin2 if it offers no increased functionality and no economic incentive for me to switch?

I'm the one who said Mastercoin could someday be worth 20-30BTC each.

That is 18,000,000 Bitcoins if you're doing 600,000*30. This number is irrelevant though because you don't have to buy Mastercoins with Bitcoins so it's not really known how much it could be worth. A Mastercoin could go for way more than that too.

Honestly I don't know how much Mastercoin will ultimately be worth, but I expect 1-2 BTC per Mastercoin at some point. 20-30 BTC per Mastercoin depends on too many factors which no one can predict and is years away from happening if it happens at all. Kind of like how Bitcoin will probably go to $1000 but $100,000 we just don't know.

I would say don't buy Mastercoin under the certainty that the protocol will work. It's an experiment, it's high risk, and if it fails then the Mastercoins could be worth 0. If it succeeds then the sky is the limit.

The price of Mastercoins should reflect the progress of the protocol and not just blind speculation. People are buying now because they expect it to reach 1 BTC but that isn't going to happen instantly, and even if a decentralized exchange were here if that did happen the exchange would need enough volume. The buy/sell orders reflected on this site are a poor indication of the kind of volume the exchange would have.

Think of yourself as a part of history. One of the early adopters in Mastercoin, and you'll be able to tell your children, grand children and friends that you had (or still have if you manage to save it) 0.2 Mastercoins.

Please remember, it's not primarily a currency so it's not about the price. You'll be able to do some amazing things with Mastercoins when the protocol matures. For instance you can create your own currency backed by Mastercoins and issue it as credit for your goods and services. Just think about how empowering it is to be able to create your own currency on top of the Bitcoin blockchain protected by the obscene hashing power of the Bitcoin network.

While I hope you buy plenty of Mastercoins, if you do nothing else then save that 0.2 Mastercoins for a year and find out how valuable it really is.

And here are our coins:
https://masterchest.info/lookupadd.aspx?address=15omoH4d3huHkzgRn3edmdrgBBoyLH1c3s

Please look deeper into the Mastercoin protocol. It's a lot to be excited about if it works and it has the potential to positively transform the global economy.
https://e33ec872-a-62cb3a1a-s-sites.googlegroups.com/site/2ndbtcwpaper/MasterCoin%20Specification%201.1.pdf
https://sites.google.com/site/2ndbtcwpaper/MasterCoinRisks.pdf
https://bitcointalk.org/index.php?topic=265488.0


Your coins are here:
https://masterchest.info/lookupadd.aspx?address=1Diamond81T9za2ZDwnY92TpvjXAN9DbWi

Enjoy!

Please read the rules of the thread. It's still on, if you follow the steps then you'll receive Mastercoins.
Yes I'm doing the giveaway, show me a url?


Your website is aimed at the coding contest and does not count for this thread. If you write about Mastercoin you will get paid based on what you write, where you post it, and how many people read it. You'll receive Mastercoin as promotional credit when you show what you've written.

Electrum as a client works fine.


And here are your coins:
https://masterchest.info/lookupadd.aspx?address=15omoH4d3huHkzgRn3edmdrgBBoyLH1c3s

Please look deeper into the Mastercoin protocol. It's a lot to be excited about if it works and it has the potential to positively transform the global economy.

Your coins are here:
https://masterchest.info/lookupadd.aspx?address=1Diamond81T9za2ZDwnY92TpvjXAN9DbWi

Enjoy!

There you go:
https://masterchest.info/lookupadd.aspx?address=1ZV3J5CKr4MuANQBohnCDXntQUHJKeKRU

Please excuse the invalid transactions. Sending Mastercoins is still a bit tricky and I'm just getting the hang of it.

Here are your coins:
https://masterchest.info/lookupadd.aspx?address=188EBEfRT6keiXkXmaEkWVLNbGFmuekU7h
Use them wisely when the time comes.



Here are your coins:
https://masterchest.info/lookupadd.aspx?address=1MengQjXcJJVHsrhMwqkJ2SCjsN6mprzoJ



Here are your coins:
https://masterchest.info/lookupadd.aspx?address=1764jyJu5goAXyS7gLK6JnMxbJZULNN1S4

Don't rush to sell them, they may be valuable once the Mastercoin protocol is complete.

Cheers!


Here are your coins:
https://masterchest.info/lookupadd.aspx?address=1888888mCoqqJXdWVSTALoKmFXRMovN3p5

Have a nice day!

Anyone who has not received coins, please check to make sure you're following the rules set by Dacoinminster.