Sent to David just a bit ago:

Mastercoin - Protocol Or Blockchain Trojan?

I've read recently that you're defending the Mastercoin project. While this is to be expected considering the
ambitious goals that have been put forward by its creator, I'd like you to please consider the longer-term
implications of what this project means for Bitcoin.

This project is taking an existing resource, the collective hashing power of the entire Bitcoin network, and
exploiting it for its own ends. There is no way to opt-out, unless we hard-fork with another client upgrade.

By treating the blockchain and the transactions within it as a "resource", to collectively read/write data into
the blockchain itself, we have a dangerous precedent -- resource usage that will burden the entire network and
everyone who uses it -- without bearing any gains, except for those using the Mastercoin protocol.

This is alarmingly similar to the behavior of bot-nets, collectively compromised machines (no opt-in, of course)
being exploited to perform other tasks that their users don't condone.

Please reconsider your defense of this project, as added weight behind it may cause a knock-on effect that will
be very difficult to correct in the future without a deliberate hard-fork, and will cause other problems.

Confer with gmaxwell, he's on freenode IRC #bitcoin channel - or via the forums - to confirm what I'm saying.
He's a in-depth subject expert in blockchain mechanics, and I believe he has the same view - that writing data
to the blockchain as Mastercoin proposes is a dangerous and potentially disruptive force.

Thanks for reading,

TT

Dean,

Thanks for digging in deeper and stating the question in a different way. I think I understand the context of your questions now.

We are all in this due diligence process together and I'm building my own understanding of all the aspects of this project. I don't have any reason to "step around" your question, I'll attempt to address it based on the best of my understanding and I'll let additional folks with deeper technical understanding like Ron and J.R. answer it from their perspective.
So to your question "What functionality is Mastercoin providing that isn’t already being met by Bitcoin?"

To my understanding Mastercoin is leveraging the existing functionality of the Bitcoin protocol. That is to say it is NOT adding any baseline functions that aren't already present in the Bitcoin protocol. What it IS going to do is create a new layer on top of the Bitcoin protocol focused on the use cases listed, including peer to peer exchange, futures contracts, and issuing additional currencies.

From your comments it seems you aren't drawing a distinction between what the Bitcoin Protocol "can" do and what the existing clients that implement the Bitcoin protocol "actually" do. That is why I asked my question about, if you knew of any actual client implementations that offered the use cases that Mastercoin is developing. If the answer to my question is "No" there aren't any current implementations, than I would respond that the reason to "bother with mastercoin in the first place" is to create actual implementations of those use cases.

For example my understanding is that the Exodus address serves the function of marking Bitcoins (in the history of the Bitcoin ledger) involved in the Mastercoin protocol therefore giving the clients a point of reference for tracking their usage and for identifying the functions they are executing if I'm misunderstanding the protocol here Ron or J.R. feel free to correct me, I've only read the white paper three times. If Dean you are proposing that there isn't a need for an "Exodus" address of sorts in order to make these use cases possible then I'd like to understand that better.

Assuming for the sake of this discussion that there IS a need for a Exodus address type of set up, then allow me to continue in logical progression to your note about Mastercoin being its "own little silo". I believe this sentiment is related to the response I hear from some programmers who dislike "pre-mined" currencies which are often owned primarily by their creators. I'd like to make a few points here. Mastercoin being on the same block chain as Bitcoin of course doesn't need to be mined with additional hashing power.

So the question becomes "What is a fair and logical way to distribute Mastercoins through the exodus address to people that wish to use their functionality"? There are lots of possible answers here, random give away, sell them, give them to developers, on and on. I stated earlier that I believe J.R. has decided on a fairly compelling way of handling this problem. That is to publicly announce on the forums that those interested in developing these use cases can support their development by purchasing Mastercoins until a certain date. Having published the technical spec and spoken publicly (at the Bitcoin Conference) about these developments he is interested to invest in and support the development of. There are also Mastercoins set aside for those developers that contribute to the development of Mastercoin in the coming years, which I believe is important as well.

So Mastercoin is not only the vehicle for the Exodus address, it becomes a vehicle for those that want to invest in and support the development of these use cases. So far that vehicle in my view has proved successful with hundreds of users deciding to support it and having collected 2,618 BTC (more than twice J.R.'s initial investment) which can now be deployed to turn the functionality of what Bitcoin "can" do into the functionality actually offered in user accessible clients.

I fully acknowledge your question is a very important one. It is one of the main questions I asked J.R. during the due diligence, for me I stated it as "is the value of this protocol in the Mastercoins themselves or in the applications it will support. Stated another way, "are these Mastercoins going to be worth anything, or is all the value created by those that offer the services on top of Mastercoin?" In our discussions J.R. convinced me that their is a value in the Mastercoins themselves because users will have to acquire them to preform the functions they desire, for futures, peer to peer exchange of other currencies or issuing of new currencies. So the value equation is similar to Bitcoin in that it is a function of scarcity and utility. I believe that Mastercoins will be scarce and I believe its functions will have great utility. Therefore I'm of the opinion they will have value.

On a related question that I also asked of "if this is open source, what prevents someone else from creating their own forked version of Mastercoin on the Bitcoin blockchain"? The answer, (as it is for Bitcoin also) is: there is nothing preventing someone from creating another version, but the first mover advantage is a big one. Bitcoin has dominated the marketplace in comparison to Litecoin and others due to this first mover advantage, name recognition, momentum, user adoption and so forth. Mastercoin seems to be poised to be the first to implement these functions on the block chain and therefore it will have this first mover advantage in the context of these use cases.

I hope I've explained my current understanding in a clear way. I look forward to your thoughts and any corrections or clarifications from the other technical folks here.
I see this open discussion as a very healthy process and extremely valuable to the due diligence process.

Best Regards,
David A. Johnston
BitAngels.co

    On Fri, Aug 30, 2013 at 2:04 AM, Eddie ------ wrote:

        Hi J.R.,

        I would like to participate in the Master Coin giveaway and have a few
        questions. First of all, can you confirm that you are the same real
        person who goes by the alias "dacoinminster" on the Bitcoin Forum <
        https://bitcointalk.org >? If the answer to that question is yes, then I
        was wondering if you could please clarify the following instructions for
        sending bitcoin to the Exodus Address which you wrote about in this post
        at published at the end of July 2013:

        ----------------------------------------------------------------------------------------
        https://bitcointalk.org/index.php?topic=265488.0

        Do not attempt to purchase MasterCoins with a web wallet (YOU COULD LOSE
        YOUR MONEY). You must use a wallet where you can control the sending
        address by sending all your funds to that address first, then purchasing
        MasterCoins with that address. (edit: Ripper pointed out that
        BlockChain.info wallet should work)

        Once you understand the risks, and have properly consolidated your coins
        in a single address in a PC wallet, you can purchase MasterCoins by
        sending your bitcoins to the Exodus Address, which is:
        1EXoDusjGwvnjZUyKkxZ4UHEf77z6A5S4P
        ...
        ----------------------------------------------------------------------------------------

        Here you posted few weeks ago (August 2013), as excerpted about the
        giveaway:

        ----------------------------------------------------------------------------------------
        https://bitcointalk.org/index.php?topic=272577.0

        I have over 520 MasterCoins and 520 Test MasterCoins designated for this
        giveaway. To receive your MasterCoins and Test MasterCoins, reply on
        this thread with the following:

            Your bitcoin address (you must be able to SEND bitcoins from this
            address as well as receive them, so web wallets which manage private
            keys for you won't work for this)
        ...
        ----------------------------------------------------------------------------------------

        I am a bitcoin newbie! I have control of my own wallet which is
        encrypted and on my laptop, thus I have the private key to it and am not
        using a web based wallet. I specifically use Bitcoin-Qt app to access my
        wallet. I have only so far only received Bitcoin from other parties such
        as Mt. Gox. Whenever preparing to receive, I use Bitcoin-Qt's "Receive"
        section to generate an address which I then give to the payer / sender
        (e.g., Mt. Gox) strictly for receiving bitcoin. If I send Bitcoins to
        your Exodus Address, how on Earth will you be able to send me Master
        Coins in return to my bitcoin wallet, unless I provide you with a
        completely separate "receive" address associated with my wallet? And
        even if I do send you a separate receive address to which you'll send me
        the Master Coins, how do you know how many bitcoins I have sent you so
        you can send me in return the commensurate amount of Master Coins per
        your promotion?

        The deadline is soon approaching and I'd like to participate but I need
        to understand this process better (especially for those new to Bitcoin
        let alone new to Master Coin) and the language needs to be clarified
        too. For example in the excerpt above, you refer to a bitcoin address
        (singular no plural) which can be used to "SEND" and receive:

        > Your bitcoin address (you must be able to SEND bitcoins from this address as well as receive them ...

        Its my understanding there is no such thing as a single bitcoin address
        that can be used for sending and receiving.

        Thanks for the clarification,

        -Eddie

        --
        http://www.fastmail.fm - A no graphics, no pop-ups email service

On Fri, Aug 30, 2013 at 10:27 AM, J.R. Willett wrote:

    Hey Eddie,

    Yes, I am dacoinminster.

    If you send bitcoins from bitcoin-qt to the Exodus Address, it's pretty hard to mess that up. I don't actually know of a way to mess that up.

    I recommend choosing an address on bitcoin QT to control your MasterCoins, but that is more for your own convenience than out of necessity. Best practice is to send ALL of your bitcoins to one of your bitcoin-qt addresses, then send however much you want to invest to the Exodus Address.

    If you look at the transactions sent to the Exodus Address (http://blockchain.info/address/1EXoDusjGwvnjZUyKkxZ4UHEf77z6A5S4P?offset=0&filter=0) you'll see lots of people who didn't take that advice. For those people, lots of different addresses contribute to the payment they made to the Exodus Address. In their case, the protocol will recognize the address which is the biggest contributor as the owner of the MasterCoins.

    Bitcoin has the ability to trace which address coins came from, so that is what is meant by a "sending address". To send your MasterCoins to someone else, you have to send from that address (the one which owns your MasterCoins) again using a very specific transaction which creates a "message" that everyone can see that your address has sent those coins to someone else. I won't get into the details, but you can read all about it on the project thread.

    Thanks, and please let me know if I can answer any other questions for you.

    -J.R.

    P.S. The 520 or so MasterCoins being given away were purchased by me from the Exodus Address. The giveaway is a different thing from purchasing MasterCoins.

On Fri, Aug 30, 2013 at 6:14 AM, Adam ------- wrote:

    Hello,

    I have a question about the Mastercoin protocol which you have published
    and recently publicised (and I don’t have an account on the Bitcoin
    forum).

    Why is it appropriate for the ‘marker payments’ (the payments which mark
    a given set of transactions as being a Mastercoin transaction) to be
    sent to an address for which someone (i.e. you) has the private key, and
    not a particular address for which no private key exists? I understand
    using such an address for bootstrapping and fundraising, but not for
    anything beyond that. What will happen to all of the funds sent to the
    Exodus address in the use of Mastercoin?

    In any case, I, who own some Mastercoins, am in favour of changing the
    protocol so that the data are not hidden in the output addresses (see,
    for example, <https://bitcointalk.org/index.php?topic=284178.msg3040840#msg3040840>).

Hey Adam,

You are absolutely right that marker payments could be sent to any address. I'm trying to be sensitive about not creating  too many unspendable TX's, so I wanted the address to be a real one, and the Exodus Address seemed like a logical choice. I doubt much money will come in that way, but to the extent money does come in, it is devoted to the non-profit MasterCoin foundation.

I think everyone is in favor of finding more efficient ways to record MasterCoin data. I expect that the details will largely be driven by other smart people interested in the project, and we'll switch over once it becomes clear that the new method doesn't have any critical drawbacks (such as making MasterCoin less secure or easier to "shut off" by an unfriendly bitcoin dev).

Thanks!

I believe no more than a couple of days of work, if you know what are you doing. Likely less than that for a person who is very familiar with the client codebase, data structures etc.

So, yes, it makes sense to do this from the start.

I have these same questions. From the BitAngels interview, it sounds like there is no protocol to prevent infinite quantitative easing. If it is successful we will see competing DinersClubCoin, AliCoin, VisaCoin, etc.

TBH, the name MasterCoin may provoke a trademark dispute. I don't see anything wrong with just calling it Exodus.

I heard someone raise an interesting question today.

Suppose I start an escrow fund based on a feed from a specific 3rd party provider. Then that provider, for whatever, reason, stops publishing the feed. What happens? Would all escrow funds / backed currencies based on that feed just die out at that point?

Just a quick suggestion: Allow a mechanism to specify a "feed realignment period" when creating the backed currency. If a price feed is silent for the specified amount of time (e.g. 1 week or month), then the person who created the currency can realign the currency to a new feed.

This is open to abuse, but only in the case the original feed dies. If the original feed keeps broadcasting daily, the creator of the currency has no special power.

Enhancement - perhaps currency owners would be able to vote about the identity of the successor feed.

Frankly, I don't know how hard this will be yet. I believe Gavin when he says there are multiple ways to do it, but I don't know what all of them are or which way is best.

I do plan to use bounty money to encourage innovation in this area early on.

The most important thing to me is not to be dependent on the charity and goodwill of people running the higher protocol layer. They are great people, but I don't want to give them a lever to turn off MasterCoin, however well-intentioned they may be.

@dacoinminster, if you're still intending to give me those 3 BTC for pointing out that problem with your proposal, could you please send them to 1GMaxweLLbo8mdXvnnC19Wt2wigiYUKgEB

@gmaxwell, thanks for your efforts.

regarding 1)

Actually, I was not referring to the technical limitations, but rather to a weakness of the system. If there is unlimited supply of coins, a rich person can exploit the system in the following way:

- He chooses a coin that has 'matured', meaning many users bought such coins, and consequently the escrow fund has a lot of money in it. Let's call them X_coins, where X is e.g. the share of a company.

- Next, he buys a HUGE amount of REAL shares of the company, resulting in a considerable rise of the value of share X.

- Then, he sells all his X_coins to the escrow fund. If the number of coins is unlimited, he makes a HUGE profit, and the escrow fund goes bankrupt.

- As the last step, he sells his real company shares.

His profit will be the initial value of the escrow fund - minus some losses due to the response of the market.

regarding 3)

If there are coins based on something like bottle caps - which you didn't defeat to be allowed - the exploit is much simpler, and you do not even need a huge capital.

A solution for this problem could be to restrict the total supply of coins to, let's say, 10% of the value of the 'real' market of this object. However, as a consequence, if demand rose continuously, the escrow fund eventually runs out of coins, leading in a rise of value of the coin clearly above the 'real' share. That wouldn't be too bad for the ones who invested, but I guess this is not the idea of the Mastercoin system?

another concern or situation to be clarified:

I assume, we are all sane people. We invest in XZXcoins (e.g. GoldCoins) in the hope the price of gold rises and then withdraw more money at a later time. In some cases, the value will fall, in others it will rise indeed. Let us consider a case, in which the value rose to an all-time high and further assume that the value of a MasterCoin remained constant during this time or even lost value (this will happen sometimes, even assumed that the Mastercoins rise in the long term).

The following will happen: Some people will sell their GoldCoins. Others see that the remaining balance in the escrow fund falls below the sum of the value of all existing GoldCoins - or gets closer to that limit (side question: is the health of the fund public?). In fear of their money, they will sell all their GoldCoins as fast as possible. The fund goes bankrupt.

My question: What happens in such a case??? The escrow fund cannot buy the GoldCoins back, due to the lack of MasterCoins. As a result, the value of a GoldCoin drops to a marginal value. Will the escrow fund then

a) still sell GoldCoins for the market price of real gold? If so, certainly nobody will buy any and the currency is dead forever.

b) sell GoldCoins for a much lower price. But even then, the 'health' of the fund remains horrible. Nobody will invest, except for ridiculously low prices, maybe in the 1% range of the value of real gold. Thus, the fund can only recover, if the value of a MasterCoin suddenly rises by a factor of 100 - which is very unlikely.

I think that every user currency will face such a sitation once (and only once  ), so my assumption is that they will all eventually die.

The risk that this will happen gets amplified by the investors knowing that this CAN happen. So they will reject their user currencies, as soon they see a small profit of a few %.

Is there an idea how to prevent this threat?

If you think that my concerns are serious, I'd be happy about a bounty   18vzopGHgPikz3Sp7FfVRxqxRn1NY5Zxq8

Hey ----,

It sounds like you would like to use 1FMxmCEAJqGQE9NhJrDn4BFbR8TWK3HK38 to hold your MasterCoins. With that information, I can now tell you exactly what MtGox would need to do:

1) Transfer 0.00028 BTC to 1Q2kjs7MjWgCtf8CfVkXHUkAeKbaMqrK9R so it has some funds to create a new send
2) Transfer 0.00028 BTC FROM 1Q2kjs7MjWgCtf8CfVkXHUkAeKbaMqrK9R to the following three recipients in one transaction
0.00006 BTC to The Exodus Address:    1EXoDusjGwvnjZUyKkxZ4UHEf77z6A5S4P
0.00006 BTC to The recipient address: 1FMxmCEAJqGQE9NhJrDn4BFbR8TWK3HK38
0.00006 BTC to The data address:      1FDrQvgY2Xr1A6GFwdjeYQdKZpExkSrh2L
+ 0.0001 BTC transaction fee

If MtGox does this for you, your MasterCoins will be at 1FMxmCEAJqGQE9NhJrDn4BFbR8TWK3HK38

The amount of MasterCoin transferred was entered as 9999999 which is far in excess of what you bought (This just means that 100% of the MasterCoins will be transferred). This transaction not include your Test MasterCoins, which are presumably far less valuable. A similar transaction could be made for them. The only difference would be the data address would be 1FDrQvgY2Xr1ADRfCoeXemmM9mEkeupEVq

Also, there is no time limit to do these transactions. If you can ever get MtGox to do it, the transfer will work. Your 1 BTC is safely at the Exodus Address, where it will be used to fund development of this protocol.

Thanks!

---------- Forwarded message ----------
From: David Johnston
Date: Thu, Aug 29, 2013 at 11:46 AM
Subject: Re: JR Willett's MasterCoin Presentation Uploaded to Google Drive and Gust.com - Investment Deadline August 31st 2013
To: bit-angels@googlegroups.com


    Due Diligence Report on Mastercoin - Q&A Style 2013 - 08 - 29 https://drive.google.com/folderview?id=0B2R_eSvAkuXSWXNmU2dneFlLTkk&usp=sharing

    Categories of Due Diligence Questions:

    1. Functioning of the Mastercoin Protocol

    2. Value of Mastercoins

    3. Use cases of Mastercoins

    4. Structure of the Mastercoin Foundation

    5. Security of Investment Funds

    6. Technical Concerns

    7. Legal / Compliance Concerns

    1. Functioning of the Mastercoin Protocol

    How does the protocol function?

    MasterCoins function on top of the Bitcoin blockchain. Its not a alt currency in the since that it doesn't have a different blockchain. Here are the details in the links below.

    Link to technical paper: http://tinyurl.com/nqun98h

    Walk us through how Mastercoins are transferred according to the spec?

    Video from BitAngels presentation, including Transaction walk through: http://goo.gl/29AmH6

    ____________________________________

    2. Value of Mastercoins

    Is the monetization going to be done on the Mastercoin ownership level or at the level of the companies that operate Mastercoin businesses?

    Monetization is done at both levels, but to be clear the ownership of Mastercoins will be valuable for the same reasons that Bitcoin ownership is valuable, that is scarcity + utility.

    Given this information will the Mastercoins have a value or are they the simple transfer mechanism that is infinitely divisible?

    While Mastercoin is divisible in the same way in which Bitcoins are and to the same 8 decimal point level. The reason it has a value is because users must acquire Mastercoins in order to transfer value with them. Example: If BitAngels were to create its own currency for investors to use in their investments, you would need to purchase enough Mastercoins to transfer the value of that BitAngels currency. Specifically lets say you wanted to purchase $25K in BitAngels currency. You would need to purchase $25K worth of Mastercoins to make the switch from BTC to Mastercoins to BitAngels coins. Lets say there are 500,000 Mastercoins created as part of the protocol, at a fund raising level of 500,000 USD. That roughly values 1 Mastercoin at $1 USD today. Well then you would be putting 25,000 Mastercoins worth of demand into the market. If not enough Mastercoin owners were willing to sell at the price of $1 USD each then you would have to pay more per Mastercoin and thus increasing the value of Mastercoins. So with the need to transfer value comes the demand and supply dynamics of the market applied to the value of Mastercoins.         

    Can you guarantee that no coins will be issued outside of those in the spec?

    Yes. There will not be any more Mastercoins issued after August 31st. That is how the protocol is designed. Additional coins would be a function of a "hard fork" and would not qualify under the Mastercoin Spec.

    ____________________________________

    3. Use cases of Mastercoins

    What are the use cases of Mastercoins?

    Peer to peer exchange, issuing of digital currencies, issue savings wallet and those listed below.

    1. Transferring MasterCoins (demonstrated)

    2. Marking an Address as “Savings”

    3. Marking a Savings Address as "Compromised"

    4. Selling MasterCoins for Bitcoins

    5. Selling MasterCoins for Other MasterCoin-Derived Currencies

    6. Changing an Offer

    7. Purchasing a Currency Offered For Sale

    8. Registering a Data Stream

    9. Offering a Bet

    10. Accepting a Bet

    11. User Currencies

    12. Stability Concept

    13. New Currency Creation

    14. Unhealthy Escrow Funds

    15. Maintaining Escrow Fund Health

    The most interesting use cases to me are #4 and #5.

    # 4 lets us have a distributed peer to peer exchange of any digital currency over the existing bitcoin block chain.

    # 5 a distributed peer to peer exchange of currencies and the like which are issued on the existing bitcoin block chain.

    ____________________________________

    4. Structure of the Mastercoin Foundation

    Are you open to structuring this as a non-profit foundation?

    Yes, that has been my intention. Lets model it on the World Wide Web Consortium / Bitcoin Foundation Style

    Proposed name: Mastercoin Foundation.

    ____________________________________

    5. Security of Investment Funds

    How is the exodus address kept safe?

    It is keep offline (therefore un-hackable) in a secure non-disclosed location.

    Does control of the exodus address have any effect on the use of Mastercoins?

    No, it simply stores the funds for development of the protocol.

    ____________________________________

    6. Technical Concerns

    Doesn't this both bloat the blockchain and create "junk transactions" in the blockchain?

    Yes, this will increase the number of transactions in the block chain but since they are creating value and transferring value this is the core function of Bitcoin. As for the "junk" transactions these are a minority of the transactions and directly support the sending of useful transactions and thus add to the value of the Bitcoin protocol.

    I'm open to improvements that will solve these bloat and junk problems in future iterations, but keeping the functions simple at first is both a good proof of concept and makes the development progress much more quickly.

    Are there not cheaper and more elegant ways to commit information into the block chain?

    Yes, there are and I'm open to exploring those in future updates to the Spec, but the initial goal is to keep the protocol as simple as possible and base it on the most elementary of existing core Bitcoin functions. By doing this we remove risk of protocol changes and support changes for the more advanced "script" features of the Bitcoin protocol.

    What about enforcement of the more advanced features like escrows, some are skeptical these will work well in the market.

    First I want to say that the easiest features will be implemented first. The features like the escrow will be implemented last. And yes absolutely those more advanced features like escrow some will be widely adopted and others won't be as compelling, and that is for the market to decide.

    ____________________________________

    7. Legal / Compliance Concerns

    Will you be getting a money transmitter license or going for other registrations with FinCen?

    No, in the same way the Bitcoin Foundation is not a money transmitter, neither will the Mastercoin Foundation be involved in any transmission operations. The Foundation will NOT operate any for profit businesses or serve users in any of the use cases described. The Foundation will promote the development of the core Mastercoin Specification and core reference client implementation. The Foundation will encourage and promote compliance and regulatory knowledge in respect to Mastercoin in the respective jurisdictions of those users implementing it for their particular use case.

    ____________________________________

Anyone wishing to comment on this due diligence report is welcome too add constructive thoughts below.
Best Regards,
David A. Johnston
BitAngels.co

---------- Forwarded message ----------
From: David Johnston
Date: Thu, Aug 29, 2013 at 10:01 AM
Subject: Re: MasterCoin - What will it take for J.R. to quit his job?
To: bit-angels@googlegroups.com


Thanks everyone for the input on how to build the Mastercoin protocol project cash efficiently.

I think we are all in agreement (J.R. most of all) that he isn't the right person to take on the day to day development of the Mastercoin protocol.
I've talked with J.R. this morning and we believe the best structure for the Mastercoin effort is a non-profit Foundation. J.R. will offer to serve as one of the Board Members of the Foundation and offer technical advice on the effort.

So that offers an opportunity for a veteran entrepreneur to step up into the role of "Executive Director" of the Mastercoin Foundation to lead the day to day efforts. The foundation will be responsible for distributing to developers all the funds collected as part of the initial fund raise and the 10% pool of "Reward Mastercoins" to developers and those contributing to the success of the mastercoin protocol.

I'm excited because I believe this is at the core of the BitAngels mission. When we began we collectively said that our goal is to "Accelerate the development of new parts of the Bitcoin eco-system" and do that by "Empowering the technical folks with partners who are veteran entrepreneurs and can build scaleable and compelling businesses". The Mastercoin project is the perfect fulfillment of this ideal. An important technical development that needs to go from prototype to scaled reality, the money is already raised and its up to us to add the social capital in the form of our entrepreneurial experience.

We have hundreds of the most experienced Bitcoin entrepreneurs in the world on this Google Group list and many more in our extended networks. I challenge the members here to reach out and help nominate the ideal entrepreneur that is at the right place to take on this task. I've just sent the following message out to my Linkedin, Twitter, and Facebook networks and I'm already getting a flood of replies.

"A software investment has recently come through BitAngels and raised $300,000. Now it needs a veteran entrepreneur to lead the effort. Anyone interested in running one of the most disruptive technology efforts in the digital payments (Bitcoin) space let me know ASAP via PM.
I challenge you to do the same and connect me with those candidates.

I'll be posting the notes from my Due Diligence report later today for everyone comments.

Best Regards,

David A. Johnston
BitAngels.co