MasterCoin: New Protocol Layer Starting From “The Exodus Address”

[killerstorm]

Dude, my concerns are legitimate and unfortunately aren't addressed.   I have read about how Mastercoin works, unfortunately I've come to the conclusion that it doesn't work.

There are two possibilities:

1. you do not understand how it works
2. everybody else does not understand how it works

Which is more likely?

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[FrictionlessCoin]

Dude, my concerns are legitimate and unfortunately aren't addressed.   I have read about how Mastercoin works, unfortunately I've come to the conclusion that it doesn't work.

There are two possibilities:

1. you do not understand how it works
2. everybody else does not understand how it works

Which is more likely?

Does it work?

[Exocyst]

So I decided to check this new hot protocol over faucet. I entered all data properly and to my surprise got 0.0000546
BTC on my Bitcoin address but 0.00125 MSC to Mastercoin address. Now I'm totally confused about the whole deal here.

1. Why amounts for BTC and MSC differ?
2. When it comes to how much BTC and MSC one receives over faucet, is ratio constant or random?
3. What happens with my 0.0000546 BTC if I spend my 0.00125 MSC or I do it the other way around? In other words,
are those 0.0000546 BTC now bound to 0.00125 MSC or not?

http://mastercoin-explorer.com/transactions/5c707b42cebe78283eb2d4c61e4dd7d4a241f35690b265e862844b58ef489bbe

they are not bound, you can spend all the btc on the address, and the msc will still be on the address

The entire mastercoin protocol is bordering on insanity.  There is no correlation as to amount of BTC sent and the MSC that is sent.  It is completely arbitrary.   In short, there is no real security that the MSC that is received is even the MSC that is available to send.

What this means is the value of 1 MSC is the same as 100 MSC or 1,000 MSC!   So you do the math?  If 1 MSC = 100 MSC = 1,000 MSC  then clearly the underlying unit is zero.

You should read the spec before accusing the developers of insanity—You clearly have a fundamental misunderstanding of what the currency MasterCoin is and how the MasterCoin protocol works.

@Mastercoin Developers: There is a real lack of understanding of the MasterCoin protocol versus MasterCoin by MasterCoin-naive. There needs to be a concerted effort to disambiguate the two.

[FrictionlessCoin]

So I decided to check this new hot protocol over faucet. I entered all data properly and to my surprise got 0.0000546
BTC on my Bitcoin address but 0.00125 MSC to Mastercoin address. Now I'm totally confused about the whole deal here.

1. Why amounts for BTC and MSC differ?
2. When it comes to how much BTC and MSC one receives over faucet, is ratio constant or random?
3. What happens with my 0.0000546 BTC if I spend my 0.00125 MSC or I do it the other way around? In other words,
are those 0.0000546 BTC now bound to 0.00125 MSC or not?

http://mastercoin-explorer.com/transactions/5c707b42cebe78283eb2d4c61e4dd7d4a241f35690b265e862844b58ef489bbe

they are not bound, you can spend all the btc on the address, and the msc will still be on the address

The entire mastercoin protocol is bordering on insanity.  There is no correlation as to amount of BTC sent and the MSC that is sent.  It is completely arbitrary.   In short, there is no real security that the MSC that is received is even the MSC that is available to send.

What this means is the value of 1 MSC is the same as 100 MSC or 1,000 MSC!   So you do the math?  If 1 MSC = 100 MSC = 1,000 MSC  then clearly the underlying unit is zero.

You should read the spec before accusing the developers of insanity—You clearly have a fundamental misunderstanding of what the currency MasterCoin is and how the MasterCoin protocol works.

@Mastercoin Developers: There is a real lack of understanding of the MasterCoin protocol versus MasterCoin by MasterCoin-naive. There needs to be a concerted effort to disambiguate the two.

Okay, so some guy runs an experiment with Mastecoin, then realizes that there is not correlation between the bitcoin being used to transfer and the MSC actually transferred.

In fact,  if someone created a user defined coin, there also is no correlation between the number of coins transferred and the number of mastercoin used to transfer.

Meanwhile nobody here really addresses this issue.

Rather you folks want to claim that I don't get it, but never really address the issue.

The issue is plain and simple,  why is there no correlation with the number of bitcoins in a transaction and the number of MSC transferred?

It is like you are creating and transferring MSC without paying any bitcoin costs.

So where is the scarcity here?  If MSC has no scarcity built in,  then where is the value?  Simple economics.

[killerstorm]

Does it work?

Yes.

Okay, so some guy runs an experiment with Mastecoin, then realizes that there is not correlation between the bitcoin being used to transfer and the MSC actually transferred.

Why do you think there should be a correlation? Amount of mastercoins being transferred is encoded in a different way. Bitcoin amounts are irrelevant.

Rather you folks want to claim that I don't get it, but never really address the issue.

The specification defines how amounts are encoded. How else this issue can be addressed?

So where is the scarcity here?  If MSC has no scarcity built in,  then where is the value?  Simple economics.

Amount of mastercoins in existence is fixed, it was possible to create new mastercoins by sending to exodus address only in August of 2013. No new mastercoins will be created. (Some amount of mastercoins will be released to foundation over time, but we can assume that they were already created.)

[FrictionlessCoin]

Does it work?

Yes.

Okay, so some guy runs an experiment with Mastecoin, then realizes that there is not correlation between the bitcoin being used to transfer and the MSC actually transferred.

Why do you think there should be a correlation? Amount of mastercoins being transferred is encoded in a different way. Bitcoin amounts are irrelevant.

Rather you folks want to claim that I don't get it, but never really address the issue.

The specification defines how amounts are encoded. How else this issue can be addressed?

So where is the scarcity here?  If MSC has no scarcity built in,  then where is the value?  Simple economics.

Amount of mastercoins in existence is fixed, it was possible to create new mastercoins by sending to exodus address only in August of 2013. No new mastercoins will be created. (Some amount of mastercoins will be released to foundation over time, but we can assume that they were already created.)

The flaw is obvious and in plain sight.  If you can not see it then I'm sorry.

There is no correlation with the underlying bitcoin! In otherwords, it is just as good as sending an encrypted message,  no difference!

The protocols have to be designed so there is a economic correlation to actions,  without it, then there is no scarcity and no value. 

Like I said, bordering on utter insanity.   

I rest my case.

[FrictionlessCoin]

Why do you think there should be a correlation? Amount of mastercoins being transferred is encoded in a different way. Bitcoin amounts are irrelevant.

Of course there needs to be a correlation.

Are you absolutely brain dead?

Bitcoin amounts are the only thing that is relevant.

The depth of the cluelessness here is astounding.

Ask yourself,  "Why do you think the correlation is unnecessary?"

[dillpicklechips]

Why do you think there should be a correlation? Amount of mastercoins being transferred is encoded in a different way. Bitcoin amounts are irrelevant.

Of course there needs to be a correlation.

Are you absolutely brain dead?

Bitcoin amounts are the only thing that is relevant.

The depth of the cluelessness here is astounding.

Ask yourself,  "Why do you think the correlation is unnecessary?"

Because if it takes 0.001 or 0.00001 BTC or whatever amount why should it matter when I'm just encoding in the blockchain to move X amount of MSC from address A to address B. Using BTC is just a way of getting the message in the blockchain. The actual BTC don't matter as obviously people are concerned with just moving MSC around.

[sandro48]

mastercoin is listed is on criptovalute.it at  http://www.criptovalute.it/mastercoin

[skywave]

@sandro48
look carefully - that is a MST not a MSC..

[udecker]

Of course there needs to be a correlation.

Are you absolutely brain dead?

Bitcoin amounts are the only thing that is relevant.

The depth of the cluelessness here is astounding.

Ask yourself,  "Why do you think the correlation is unnecessary?"

Imagine for a moment that you are trying to move 100lbs of gold across a river.  You’d need a ferry.  As long as it’s large enough to make it to the other side of the river, it’ll carry your 100lbs of gold to the other side.  Or 10lbs of gold.  Or 1oz.  Or a speck.  To simply move it, the size of the ferry really doesn’t matter, nor does it matter how much that ferry is worth.

Bitcoin is the ferry.  Mastercoin is the gold.

[FrictionlessCoin]

Of course there needs to be a correlation.

Are you absolutely brain dead?

Bitcoin amounts are the only thing that is relevant.

The depth of the cluelessness here is astounding.

Ask yourself,  "Why do you think the correlation is unnecessary?"

Imagine for a moment that you are trying to move 100lbs of gold across a river.  You’d need a ferry.  As long as it’s large enough to make it to the other side of the river, it’ll carry your 100lbs of gold to the other side.  Or 10lbs of gold.  Or 1oz.  Or a speck.  To simply move it, the size of the ferry really doesn’t matter, nor does it matter how much that ferry is worth.

Bitcoin is the ferry.  Mastercoin is the gold.

Ok.  If you want to use this analogy.   So if Mastercoin is the gold, then what are the user defined coins defined in Mastercoin?   

Maybe Bitcoin is the ferry,  Mastercoin is the container,  and the gold is in the user defined coins.

What value does one place on this 'mastercoin' gold.  We know the value of bitcoin is based on the energy and resources to extract a bitcoin.    How much did it cost to extract this Mastercoin gold?

Also, what is the utility of this mastercoin gold?  if one master coin can contain the same number of user defined coins as 100 master coins,  then what is it worth?

We can continue to go on like this, and you begin to realize that is is all absurd.

It is absurd since  Bitcoin is the gold and Mastercoin is just some label that you have printed on the gold.    Sure, may have some value, but not anywhere near the Bitcoin.

[BitThink]

I think you will learn more by spending the time on reading the white paper rather than try to arguing here again and again, based on your imagination what mastercoin is.

We could have a better discussion if you could quote some text from the white paper with your understanding.

[udecker]

Ok.  If you want to use this analogy.   So if Mastercoin is the gold, then what are the user defined coins defined in Mastercoin?   

Maybe Bitcoin is the ferry,  Mastercoin is the container,  and the gold is in the user defined coins.

There is a distinction to be made between the Master Protocol, Mastercoins (MSC) and additional currencies that live atop the Master Protocol. 

What value does one place on this 'mastercoin' gold.  We know the value of bitcoin is based on the energy and resources to extract a bitcoin.    How much did it cost to extract this Mastercoin gold?

MSC are standalone, finite units of exchange that obtain their value based on the market.  The cost to extact this Mastercoin gold started with the Exodus address contributions, at which point they float as a separate unit of exchange.

Also, what is the utility of this mastercoin gold?  if one master coin can contain the same number of user defined coins as 100 master coins,  then what is it worth?

The utility is in the protocol itself.  Since MSC have already been defined as a unit of exchange that can live within the Bitcoin blockchain, a similar methodology can be employed to allow for additional finite units of exchange to be represented in a similar manner, but those new units of exchange would be independent of MSC, and would exist alongside them on the Master protocol.  One MSC is worth one MSC.  10 MSC is worth 10 MSC.  One <insert new currency using the Master Protocol> is worth one of whatever it is, and has an independent value, unrelated to the value of any MSC.

We can continue to go on like this, and you begin to realize that is is all absurd.

Personally, I like the absurdity.  Primarily, it provides a layer of abstraction that can be used for any number of purposes.  It leverages the proof-of-work already occuring on an existing blockchain to lock-in additional transactions of the Master Protocol, which are interpreted separately from the Bitcoin transactions (using those Bitcoin transactions merely as transport for the additional data encoded in the Master Protocol’s cleartext transaction).

It is absurd since  Bitcoin is the gold and Mastercoin is just some label that you have printed on the gold.    Sure, may have some value, but not anywhere near the Bitcoin.

To be honest, you make another good analogy.  Mastercoin *can* be seen as the label you’ve printed on the gold.  So, let’s go with it.  You’ve got an ounce of gold.  It’s worth $1,200.  On that block of gold is printed a Bitcoin address, and an encoded private key, which exists no where else.  That key holds 10,000 BTC.  How much is your ounce of gold worth?  Now, on another ounce of gold is the entire source code of Adobe Photoshop.  How much is that ounce of gold worth?

[FrictionlessCoin]

I think you will learn more by spending the time on reading the white paper rather than try to arguing here again and again, based on your imagination what mastercoin is.

We could have a better discussion if you could quote some text from the white paper with your understanding.

Actually, I've read enough.  At it's current stage it is not secure and nobody in his right mind would use it as a platform for their own assets.

Unfortunately, there are too many people who invested too much money on it already.

[killerstorm]

Ok.  If you want to use this analogy.   So if Mastercoin is the gold, then what are the user defined coins defined in Mastercoin?   

Maybe Bitcoin is the ferry,  Mastercoin is the container,  and the gold is in the user defined coins.

What value does one place on this 'mastercoin' gold.  We know the value of bitcoin is based on the energy and resources to extract a bitcoin.    How much did it cost to extract this Mastercoin gold?

I think that you're trying to say that user-defined currencies do not create additional demand for Mastercoin, and thus do not increase its value.

It is true, to a certain extent. (They make Mastercoin more useful no more than they make Bitcoin more useful.)

However, you're missing that demand for mastercoins can come from other directions: mastercoin provides features which work only for mastercoin-based currencies, and mastercoin is probably the biggest mastercoin-based currency, so people will use it.

Particularly, escrow-based currencies and CFDs: when/if these features will be in use, you'll need some mastercoins to use as an escrow/collateral for CFD. If there is a large CFD market, (e.g. suppose it requires $1B of value in collateral), mastercoin "market cap" will also be large.

if one master coin can contain the same number of user defined coins as 100 master coins,  then what is it worth?

You seem to be missing the fact that mastercoin itself will be used as a currency. Would you rather use Mastercoin which has $200M market cap, or some shoddy "user defined coins"?

"User defined coins" is not the only feature.

[FrictionlessCoin]

I think that you're trying to say that user-defined currencies do not create additional demand for Mastercoin, and thus do not increase its value.

It is true, to a certain extent. (They make Mastercoin more useful no more than they make Bitcoin more useful.)

Yes, this is precisely what I am getting at.   SatoshiDice used Bitcoin to spam messages.   Mastercoin appears to also exploit Bitcoin with no benefit to the transport currency.

However, you're missing that demand for mastercoins can come from other directions: mastercoin provides features which work only for mastercoin-based currencies, and mastercoin is probably the biggest mastercoin-based currency, so people will use it.

Particularly, escrow-based currencies and CFDs: when/if these features will be in use, you'll need some mastercoins to use as an escrow/collateral for CFD. If there is a large CFD market, (e.g. suppose it requires $1B of value in collateral), mastercoin "market cap" will also be large.

However this is no different from someone issuing his own currency using an Open Transaction (OT) server.  I can get the kind of escrow functionality mastercoin can dream of today.

You seem to be missing the fact that mastercoin itself will be used as a currency. Would you rather use Mastercoin which has $200M market cap, or some shoddy "user defined coins"?

"User defined coins" is not the only feature.

That is not the point of "user defined coins", these could be company stock, bonds or other instruments that back real world assets like gold.  They derive their value from the entity that issued them.   

Furthermore, the Mastercoin market cap is at present not based on an efficient market.  Let's see how it reacts when placed into a real exchange.   Let's see how Mastercoin survives in the real world where people are always trying to game the system.     

This could go all crumbling down via a double spending attack.  Let's see if any exchange with a lot of BTC to lose will trust this coin in their exchange.

[udecker]

That is not the point of "user defined coins", these could be company stock, bonds or other instruments that back real world assets like gold.  They derive their value from the entity that issued them. 

You’ve got it.  Did you see my note above regarding the “printing of labels” on a brick of gold?  The Master Protocol is what allows the issuer the capability to do exactly what you describe.

[go1111111]

I disagree. In January 2012 the number of people who believed in Bitcoin or Satoshi's vision was still very small.

I think the relevant thing here is that to the audience that J.R.'s paper was aimed at, the Satoshi paper was a huge deal. It doesn't matter that their absolute number was small.

Even so- Satoshi isn't a god. We don't even know if he was one person, and there are plenty of theories he was sponsored by an Intelligence agency. I don't know why you are trying to turn Satoshi into some all-knowing crypto god.

Not sure why you keep strawmanning what I'm saying with this "god' stuff. Satoshi wrote one of the most important papers in the cryptocurrency space in the last 10 years. J.R. and the people who he wanted to read his paper all knew this. Satoshi doesn't need to be a god for J.R.'s title to reflect badly on him.

I don't understand why you need them to deliberately be some sort of humble characters? If they were humble people, they wouldn't wake up in the morning thinking they could fundamentally restructure the global financial system. Fortune favours the bold, (and most likely arrogant). I think most of us are okay with that.

I'm not suggesting they should be humble. Some of the core bitcoin developers obviously have big egos. Most successful tech entrepreneurs have big egos. That's fine. What is strange is how hard the people behind mastercoin try to look important, and how transparent their attempts are. It's more indicative of insecurity and a lack of social awareness than a genuine ego. It reminds me of how a 15 year old thinks a successful person acts.  

[Exocyst]

I had a wacky idea for using multisig m-of-n outputs as a vehicle for implementing decentralized datastreams as bet arbiters on the MasterCoin protocol. If interested, check it out in my github fork of the mastercoin spec and tell me if the idea could hold water.