Hopefully we can go a while before the next hack!

[“MasterCoins are intended to be an investment opportunity on par with buying bitcoins when they first came out.” Perhaps that is a bad analogy?]

Mastercoin is an interesting idea whose aim is to “build a protocol layer on top of bitcoin (like how HTTP runs on top of TCP/IP)” 

It promises:

•   Additional security features to make your money much harder to steal

•   Built-in support for a distributed currency exchange

•   Built-in support for distributed betting (no need to trust a website to coordinate bets)

•   Built-in support for "smart property" which can be used to create and transfer property such as   titles, deeds, or stock in a company

•   Capability to hold a stable user-defined value, such as an ounce of gold or U.S. Dollar, with no need to trust a person promising to back up that value

It tries to accomplish these features by moving bits of BTC around in the blockchain in a very specific manner and labels them Mastercoins. All Mastercoins come from the “Exodus Address”. No more Mastercoins can be created. It is hoped by limiting the supply, the value of Mastercoins increase as people use them and that Mastercoins can provide escrow type features. It is a ledger type system of recording BTC movement and having those movements represent something else.

In the introduction thread of Mastercoin it is claimed that “MasterCoins are intended to be an investment opportunity on par with buying bitcoins when they first came out.” Perhaps that is a bad analogy?

Mastercoin development is funded by all the bitcoins sent to the exodus address. Those bitcoins will be used to bankroll the project while the users are given bits of BTC that represent Mastercoins. These new coins are then traded like any other currency.

It is hoped that like bitcoin, it gets the first mover advantage and users will flock to Mastercoin making the bits of BTC representing the Mastercoins very valuable. The momentum behind the project will prevent any other competitor from gaining market share in a similar fashion to all the alt coins compared to bitcoin.

I think they are wrong in many aspects and Mastercoin proponents are comparing “apples to oranges”. I think Mastercoin will have to compete more like a protocol (which it claims it is) and less like a currency.


Because it is a protocol:

1. Mastercoin is easily replaced or cloned with more advanced protocols
2. Mastercoin will not be the only “layer or protocol” built on top of bitcoin and will therefore not be a monopoly forever. They will however have the first mover advantage.
3. Mastercoins as a “store of value” as opposed to “ledger entries” is flawed

Mastercoin claims that with widespread adoption any new system will face lots of resistance because Mastercoin will be already established. The comparison of LTC to BTC often comes up. It’s a bad analogy. BTC and other crypto currencies are backed up by miners. BTC has a huge framework of hardware crunching away. The massive army of miners provides huge momentum and resistance to change. A better comparison would be bitcoin being the routers running the internet while Mastercoin and other frameworks like colored coins are web standards like html or scripting languages. The later being a lot easier to change in a moments notice.

Mastercoin is built on top of bitcoin. This makes it a completely different scenario than previous crypto currencies. All security of transactions in the ledger comes from bitcoin automatically. Imagine a scenario where LTC could instantly have the same network security as BTC. BTC’s hold on the market share would be at risk. They would be on the same playing field with little advantage of one over the other. LTC could easily steal market share under such a scenario. Any Mastercoin competing protocol will have the same network backing it up. Security will be the same. It will be a competition of features only. Will momentum be enough if new protocols emerge that are more advanced? I highly doubt it.

As Colored coins and Mastercoins and other technologies emerge it will be survival of the fittest. Money might not be enough to ensure a protocols success. Eventually the best protocol will likely come out at top and win market share. Especially if the work involved in switching is almost nothing. No hardware to upgrade or change for example.

Attempting to create a new “currency” on top of bitcoin is in my opinion Mastercoin’s biggest mistake. I understand the intentions of trying to fundraise a new protocol and it is a clever attempt. Unfortunately I think that by doing this Mastercoin has sacrificed its potential. It will always be at risk of being replaced and with it all the BTC invested will be gone. And not just the BTC invested to start the project but all the BTC invested as Mastercoins raise in value as they are traded. To survive as a “store of value”, Mastercoin has to remain popular no matter what type of competition emerges. That will be very hard to accomplish. If Mastercoin was a true protocol the store of value would have remained in BTC while Mastercoin was an interface for interpreting the movement of BTC. All the escrow features could have easily been done with actual BTC instead of creating a new currency on top of another currency. 

Perhaps there is another way to fund protocols for bitcoin without having to sacrifice their functionality and ensure that investors are compensated?

1.   Conduct a “protocol IPO” where an idea is presented with a plea to fund the idea
2.   BTC raised would be invested for the development while all investors get “shares” in the technology
3.   Design the protocol in such a way that a “donation” or “fee” is necessary for tracking
4.   As the protocol becomes popular the fees are used for future development and for paying dividends on the protocol's shares


What Mastercoin2 could look like:

-reuses almost all mastercoin code with small modifications allowing for both projects to share code
-the creation of mastercoins2 comes from a transaction where multiple outputs are created with one being the “donation” address. The donation would be similar size to a regular bitcoin fee. A few cents. A mastercoin2 creation transaction would be the donation, a bitcoin network fee, and the actual mastercoin2 outputs. This also means that mastercoins2 are only created when they are needed and don’t have to be purchased anywhere else first. They are just for maintaining the ledger and contain very little value in of themselves. It also means that the users of mastercoin2 are not at risk of speculation of a currency on top of a currency. The value remains in BTC.
-the donation address would be funded as the protocol becomes popular because even though people could send the minimum the bitcoin network will allow most will probably leave the software alone and just pay the few cents as apposed to 1/100 of a cent. The donation would be required as it marks the outputs as mastercoins2
-any time escrow is needed, actual BTC is used. It will keeps it’s value no matter what type of fancy protocols emerge to replace mastercoin2


These are just my thoughts. I have been really thinking about Mastercoin and colored coins and I'm starting to really wonder about all the BTC being invested in speculation on perhaps people being mis-informed on what they are buying.

Perhaps I'm wrong, but I don't really see Mastercoin being similar to bitcoin at all. They are apples to oranges and by people thinking Mastercoins are going to be around just as long as bitcoin in the long run is a pretty big stretch of the imagination. Mastercoin is usefull now but every so often new replacements will come along while bitcoin will always be underneath running all the new protocols. Unless I'm missing something or don't understand Mastercoin?
 





 

http://konradsgraf.com/storage/On%20the%20Origins%20of%20Bitcoin%20Graf%2023.10.13.pdf

Just... wow!

Is there a country where a business could be safely set up that sells colored coins/tokens of btc that are pegged to the dollar? Somewhere where they could sell as well as buy back the tokens and having the all funds all backed up in a bank or is such a business always at risk of being seized making the tokens worthless?

I wish to create a page on the Bitcoin wiki about colored coins. Since it's such a new technology layer being built on top of Bitcoin I'm looking for ideas on what kind of features will be possible. Both immediately and theories about what it could potentially enable as it matures. I will then try to condense the ideas into a wiki for a more general audience to become familiar with what colored coins are and what they can do.

I'll try to edit this OP too with some of the ideas:

-decentralized P2P exchanges
-user created currencies with the bitcoin network providing security of transactions
-asset marking or smart property


What else?

https://www.youtube.com/watch?v=cVGEbtIBxIE

Watch Bitcoin evolve and grow before your eyes! Enjoy!

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

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

The “chicken and egg” problem:
-shops are not motivated to spend the time and money to adopt Bitcoin because very few people use them
-few people are investing the time to get Bitcoins to spend at shops because very few shops accept them

Bitcoin Light:
-merchants can accept Bitcoins with almost no work, money, or understanding of how Bitcoin works
-it would require almost no training to use and does not require the businesses POS systems to be altered at all
-if accepting Bitcoin takes 10 minutes to set up: it makes financial sense to set up even if it’s rarely used if at all
-by making Bitcoin extremely easy to accept as payment more merchants will accept it and the consumers will follow once enough shops are accepting Bitcoin

How it works:
-each merchant gets a sticker, on the sticker is a QR code that is a simple unique shortcut to the payment processor website
-the merchant sticks the sticker somewhere near the register
-the consumer makes their purchase and the merchant verbally gives the total due
-the consumer informs they are paying with Bitcoin and would then scan the QR code
-after the website from the QR code is launched a simple interface appears asking for the total due that the consumer fills in
-the website then displays the amount of Bitcoin to send and an address
-the consumer then sends the Bitcoin
-as soon as the payment processor detects a payment the processor uses an automated telephone service to call the merchant
-the automated voice announces through the phone the amount in local currency that was sent followed by a pin number (the pin is setup by the merchant initially to prevent spoofing)
-if the message announces the correct amount the sale is completed
-the payment processor then sends the merchant the funds as normal

Advantages:
-all that’s needed is a phone!!! No computer to set up or anything to program! Perfect for “brick-and-mortar” shops!
-to set up accepting payments all the merchant has to do is apply a sticker and call a number to initialize where to send funds, what number to call when payments are made, and set up a pin (perhaps all the details for setting up are on the peel off backing)
-each merchant can also use other methods for checking payments: SMS, email, online website. Merchants may want multiple methods of notification.
-almost no effort to set up Bitcoin and little is wasted if no one uses it
-if Bitcoin becomes popular for that merchant they can easily upgrade to a better system with the payment processor

How it can become viral:
-if all that’s needed is a sticker then every Bitcoin fan can become a payment processor salesperson and get more Bitcoins!
-bundles of stickers can be distributed with profit sharing set up for each person getting a pack of stickers (each bundle would be associated with a salesperson)
-Bitcoin fans will want to take the stickers to stores they frequent in hopes they can spend it there
-even if they are the only customer, because it was so simple to set up, the merchant lost very little in resources
-a directory of Bitcoin accepting shops is VERY VERY important. Perhaps coinmap will be this directory? As Bitcoin fans travel and shop they will use this directory and that will help drive Bitcoin success stories fueling more growth

Good idea or not? I'd love to see "Bitcoin Light by BitPay" or "Bitcoin Light by BIPS" one day!

I was thinking about https://www.proofofexistence.com/ and was wondering if it's possible to create a transaction that is either all fees that includes a manual hash in it or a transaction that includes a hash that is somehow up for grabs by anyone after a set amount of time or even a transaction that is spendable by whoever notices it first?

Would doing that allow hashes to be stored yet still allow the transaction to be pruned for thin clients? Or would the blockchain bloat be pretty much the same?

I want to create a simple command in linux that is sent to bitcoind that will return a new private and public key that I can send to echo to a text file?

A lot of miners are transitioning to ASICs. Obviously BTC is a very popular method to pay for ASICs and related services. Eventually though along the supply chain all these hardware purchases have to be converted to fiat. This is a LOT of hardware being bought. This will cause a downward pressure until the transition has completed. But BTC still might rise despite these pressures. Thoughts?

This thread is for ideas on possible nicknames for mBTC. After a while I'll set up a vote thread using the most popular ideas and we'll see what this community likes for a nickname. Perhaps a winner by a large margin may cause it's usage to become mainstream! Fame and fortune await whoever creates a clever and fun name for the mBTC.

Perhaps, if the nickname catches on, it will help transition people off of using whole BTC for pricing and transition to mBTC.

I'll through mine out there: mibs (like ribs but with an m sound)

I'm curious when you think it will happen and what the minimum value will be.

Here's a little idea I thought of while day dreaming!

There seems to be a demand for a solution that provides better security for instant transactions without risking double spends.

Some will even mention LTC as being better in this regard as it has faster confirmation times. 1 confirmation in LTC is still better than 0 confirmations in BTC. There are merchants who want SOME type of assurance until a transaction finds its place in a block, even if it’s not as good as a complete confirmation. Something that assures the merchant that it’s not a double spend or that a double spend will be hard to accomplish.  My idea could allow for instant secure transactions without any modification to the protocol at all.

The method I’ve pondered is using a “Miner’s Alliance for Instant Transactions” (MAIT).

If the merchant requires the use of high security instant transactions the merchant requests payment from the customer with a built in fee. This fee is actually set by the MAIT and may not be what the general Bitcoin network is using for fees.

The transaction is then re-sent to the MAIT using an API that:
-sends the 0-confirmation transaction to the MAIT for verification (Is it valid? Is it a double spend of something already out there? Was the proper fee attached for MAIT?)
-responds back with how much of the MAIT has “Ok’ed” the transaction

The merchant then gets back a message saying how much the MAIT has accepted the transaction. The merchant also gets the MAIT promise that any NEW transaction that would be a double spend of the previous transaction will be ignored even if the fees are higher. A miner who breaks this rule can no longer be part of the alliance. It also promises to include the transaction in the next available block if possible. The MAIT does this for slightly higher fees while the merchant gets instant feedback on how likely the transaction will succeed.

IF a large margin of miners and pools join MAIT, then instant transactions will be even more secure then the 1-confirmation in any faster confirming alt coin. If >90% of the network has promised your transaction going through, a double spend becomes even harder to accomplish as the attacker would have very little chance of making a block to double spend.

The miners win as well as they could have a slightly higher fee to provide the service. Even having a separate fee system where costs are shared amongst all members.  

Would this work or not?

Another crazy idea would be using the API to get specific addresses for merchants to use so they are not normal fees but a payment to the merchant as well as a payment to the MAIT in the same transaction. The alliance then commits to this transaction EVEN if a double spend happens in another block.
(edit: but probably give up after 1 block or something) The MAIT will ignore the block that does the double spend and since they have a huge majority of the network they can fork the blockchain without the double spend. This would make it against any other miners intrust to ignore or go against a MAIT transaction! It would probably mean that other miners who aren't part of MAIT will have to be careful not to include a double spend, especially one that's in the public MAIT transaction waiting list for inclusion in a block.

Is it possible to send an encrypted message to an owner of an address using that address's public key?

I'm a big fan of Bitcoin and have been thinking about new ideas and future trends. I've come up with what I think is a pretty novel way for "brick and mortar" stores everywhere to accept Bitcoin without the business having to understand or deal with Bitcoin. My target audience would be stores who may only do one Bitcoin transaction in a day, week, or even month.

My idea would be a close competitor to sites like BitPay. It operates in a very similar fashion but uses a method where the merchant doesn't have to do any computer set up or deal with APIs etc. The merchant can be completely clueless about computers and still accept Bitcoin easily.

I have no experience with business or programming. I'm not sure the best path I should take. If I try to find capable people to set it up, I'm pretty much the "idea guy" that's not really needed once it's set up. I'd also be setting myself up for direct competition with more established players who could copy my idea without too much work. Or, I could try selling my idea to a payment processor, but I'm worried they'll just say no, but copy my idea anyways.

What would you suggest I do? Any tips?

Let's say I have some data that's encrypted with a few public keys including my own. Is it possible to revoke a key for the data without decrypting it fully and encrypting it again with the keys I wish to remain with it?

Will the network ever get so big that something else will have to be used?

I'm wondering if such a site exists. One that weighs the respective volume on all the exchanges with prices to come up with some average price? Where the higher the trade volume the more the exchange price is taken into account?

What is the most reliable way to print a few hundred private keys along with the matching addresses. I would prefer to not use anything other than BitcoinQT (on linux)  and not have to do each one by hand?

edit, it doesn't have to printed of course just a text file or something with a hundred keys with matching addresses.