This topic has been discussed before.

MasterCoin is a codename (coined by dacoinminster) for a concept that has been discussed many times here. The basic idea is a new P2P cryptocurrency that allows anyone to easily issue, control and distribute new types of coins.

Example use cases

 - Greece might issue "Drachma 2", a new coin that they manage.
 - A gold trading company can issue GoldCoin, which they promise is always backed by physical gold (insured by 3rd parties)
 - An individual can issue MyCoin, and distribute those to people who he values ... he would then be willing to trade this coin in exchange for his time
 - and so forth...
 - Other Bitcoin-like coins can be issued on top of this coin, investigating properties like faster confirms, different economic properties, StakeCoin, ...

The idea is that Bitcoin itself has very rigid economic properties, that will never be changed, namely fixed money supply and a specific coin minting schedule. Who says these specific parameters are "the correct ones" for the currency that positions itself as a candidate for being the one global currency?

Alternate cryptocurrencies can be created by forking the Bitcoin client, but this process is damn hard. A group of non-techy friends that want to create a "BeerCoin", local to their group, that symbolizes who owe who a beer, will never fork the Bitcoin client. Beyond the technical difficulty of forking, alt coins often have low hash power, and are prone to various attacks because they don't share Bitcoin's hash power (Merged Mining is not a trivial solution for any new alt coin).

So far I just introduced the topic, but I didn't say that I support it.

My opinion

I remain unconvinced that this concept is needed. I believe that people don't really have a need to deal with a lot of coins, and that the ideal situation, for the human kind, would be to have only one representation of money.

As for some of the use cases above, I don't think that a p2p cryptocurrency is the best solution for them. Open Transactions might fulfill all the requirements without the added complexities of Bitcoin, and without being a burden on its blockchain.

I believe that Bitcoin has all the desired properties of an ideal currency. There might be a few competing variations, with minor changes to the coin minting schedule, block confirmation strategy, and so forth ... but we don't really need more than a handful such alternates.

Implementation Notes
Just an aside - I prefer to keep the discussion at the "is there a need for this" level, but I still wanted to reference  two possible implementations for this concept as a p2p currency:

 - Dacoinminster's proposal of MasterCoin (already linked) - a new blockchain that people can switch into by "destroying an amount of bitcoin" in exchange for obtaining new MasterCoins.
 - "Coloring Bitcoins" using a modified client, but without any protocol changes.


Discuss

Wow. That didn't take long.

Working on MasterCoin type things...

Man this place lights up when summer is over just like Anons.

Well the hive has ideas, I guess we can find some common ground.

Is this necessary in order to work around the enmity some miners seem to have toward merged-mine-able chains?

In principle merged mining was intended to accomplish this ability for many new coins to easily be brought on line, in practice merged mining was even used to attack alternative chains instead of to secure them. Though maybe a more aggressive legal-action response to folk who attack networks could eventually ameliorate that, at least moving it from a public action of major pools to a back alley operation fully acknowleged to be as illegal as any other cyber-attack...

-MarkM-

Cons: I do not think that I should be mining GoldCoin if I never use it. I only want to spend resources on Bitcoin.

Pro: I refer you to Milton Friedman, who advocated the use of different currencies in different countries in order to allow free market to set converstion rates on the currencies -- it would represent different development of the countries, and their law system.  A Chineese worker gets payed salary in his currency, and american consumer buys chineese exports in dollars. The conversion rates will balance out for everyone to make a good living / spending situation. Mind you, Friedman developed this idea, before an electronic "gold" like Bitcoin existed.

The main reason to use the bitcoin chain is to harness the community of bitcoin, and let it scale towards an economic infrastructure rather than just one currency.
The Second Bitcoin White paper http://bit.ly/SecondBitcoin (with open comments) is indeed a great comprehensive work on the shortfalls of the bitcoin , I believe that a lot of the concets there are not required for the main problem which is :
"Alternate block chains compete with bitcoins financially, confuse our message to the world, and dilute our efforts. These barriers interfere with the adoption momentum of bitcoin and the adoption momentum of alternate currencies as well, regardless of how well-conceived their
rules may be."

The bitcoin2.X (or possibly bitcoinX http://bit.ly/Bitcoin2) is a much simpler approach :
instead of fixing the value of one currency, lets use the bitcoin infrastructure to create a number of currencies all based on the security of the bitcoin , by simply recognizing a coloring protocol on top of the bitcoin protocol .

I love the Milton Friedman Quote, it conveys exactly what we are saying, why build a currency if you can rebuild the economy ?

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I don't think this is a good enough reason. If there are technical benefits to using OT (and I think there are), then it should be the chosen solution. Bitcoiners might still be early adopters of this new tech.

I failed to understand about a half of MasterCoin paper, but it seems to be way too complex and it's unlikely to work. dacoinminster is neither a programmer nor a crypto guy, so there is a lot of unimplementable wishful thinking in there.

However, coloring bitcoins is the shit. I really see no downsides, but it's incredibly easy and in can work.
Even if it doesn't catch on, it's definitely worth to implement it as an experiment.

(Well, technically there is a couple of problems: Bitcoin blockchain is hostile towards microtransactions and probably cannot scale to support them on a large scale. But it isn't a fundamental problem, I think.)

Compared to other solutions, it is interesting because it allows one to create new assets with pretty much zero friction. There are no servers to worry about, no security woes, no DDoS attacks. Just color some bitcoins and it works: forever, worldwide, for free, in a form which is highly resistant to censorship and blockades.

Isn't it awesome?

Merged mining really cannot compete with it because it is incredibly hard to create a new asset with it.

OpenTransactions, perhaps, can, but colored bitcoins have numerous advantages. So it would be interesting to see them competing.

Is anybody working on an implementation now?

Well, I'm interested in colored bitcoins, but not so much in that twitcoins. To be honest, I don't see how that can work: there won't be any demand. Also, unlimited supply...

But if you're working on bitcoin integration perhaps same code can be used for other colored bitcoins, like in general case, then I'm interested in that. But I don't have much spare time, to be honest...

I haven't found any github links so I don't see what is done (and in which direction) so far.

First step should be to localise all the details of the code that make the program look like it is one particular type of coin.

That is, all the places where the name of the coin is displayed and so on.

That way any "colour" of coin or any "alt" coin can be built easily as all the strings and logos and so on that are different from one coin to another will all be in one place easy to switch/change.

Similarly, the key constants that make it one coin or another: the port and rpcport, the IRC channel, the DNS seed and so on.

Basically make the code generic. First step to making it easy for people to create their clients easily for their chosen colour of coin.

-MarkM-

What will you be using as an exchange for, say, these "twitcoins" for example?

If you use Open Transactions for your twitcoins or whatever coins, you'd also have markets too automatically...

-MarkM-