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Author Topic: Colored coins VS Mastercoins - Which one is better?  (Read 18625 times)
dacoinminster
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October 17, 2013, 06:31:20 PM
 #21

Ah, the bitcoin forum. There is never any lack of people spoiling for a fight here. Smiley

I would have invested in colored coins if investing in them were possible. They really are a very simple and elegant approach to releasing smart property, and they have smart people working on it. However, it wasn't possible to invest (aside from just owning bitcoins), so I tried to make something to accomplish those goals (and considerably more) which people COULD invest in. Now we have MasterCoin, and we're adding features and addressing technical concerns as quick as we can.

I'll always have a warm place in my heart for Meni and Alex and the other guys working on colored coins, no matter how much they criticize MasterCoin. In truth, we all have very similar visions of what we want bitcoin to do, but different avenues trying to get there. I feel similarly about bitshares.

In the end, the market will decide. In the meantime, who could ask for a more entertaining set of projects to work on and watch?

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Meni Rosenfeld
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October 17, 2013, 07:11:49 PM
 #22

I finally found what I was looking for -
RSA Animate - Drive: The surprising truth about what motivates us
An interesting watch.

I'll always have a warm place in my heart for Meni and Alex and the other guys working on colored coins
Thanks JR Smiley

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October 18, 2013, 02:52:08 AM
 #23

So.... the time to check this way grows unboundedly with the number of transactions since the colored coin was created?
If this becomes a real problem, it may be solved with "re-genesis": sending an old colored coin back to the issuer for a new one.
I think that by the time this is a problem, Bitcoin or an alt would be modified to natively support tag-based coloring, and then verifying a CC transaction will be as easy as verifying a Bitcoin transaction.
Well, I have a fully workable solution: https://bitcointalk.org/index.php?topic=253385.0 , but "there is no way in hell you are going to get a colored-coin-specific opcode included in Bitcoin"
Peter is known as a vehement proponent of blockchain frugality, I wouldn't count his comment as authoritative.

Currency is a special case of arbitrary assets. If there's no support to turn Bitcoin into a platform for decentralized digital arbitrary assets, we'll just have to create a new one based on the same principles.

Actually I agree that it might not be fair to require all full nodes to validate the color. It could be done in an alternative way. For example, the color coin issuer may trace all their color coins in the blockchain, calculate the merkle root of the txid, and timestamp it on the blockchain. Therefore, SPV nodes only need to look up the merkle root to determine the validity of a color coin

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October 18, 2013, 05:04:46 AM
 #24

Am I correct in assuming that to use Mastercoins you have to use coins that originate from the genesis address whereas colored coins you can use any BTC you want? If so, will this keep Mastercoins value similar to BTC since a more available alternative is available through colored coins?


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October 18, 2013, 05:54:34 AM
 #25

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

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

Too soon to know. Mastercoin has momentum and funding. Coloredcoin does not.
I'd say Mastercoin has the advantage but Coloredcoin will be important for altcoins.
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October 18, 2013, 06:16:29 AM
 #26

Am I correct in assuming that to use Mastercoins you have to use coins that originate from the genesis address whereas colored coins you can use any BTC you want? If so, will this keep Mastercoins value similar to BTC since a more available alternative is available through colored coins?
Well, not exactly. Colored coins are coins with a tx subgraph that traces back to a genesis output specific for a color, which can be chosen by the color issuer to be from any coins.

But Mastercoin doesn't trace coins in that way. The bitcoins that are used for authorizing Mastercoin transactions don't need to trace to anything. However, only private keys that have sent funds to the Exodus address during issuing, or received mastercoins since, are recognized as having mastercoins they are able to send.

Also, it is not clear to me that using Mastercoin will require having significant amounts of mastercoins.

Mastercoin has momentum and funding. Coloredcoin does not.
Colored coins have funding, most notably a few 100's of BTC of bounties donated by eToro.

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October 18, 2013, 08:07:50 AM
 #27

Mastercoin has momentum and funding. Coloredcoin does not.
I'd say Mastercoin has the advantage but Coloredcoin will be important for altcoins.
'Mastercoin has the advantage' -  Are you nuts?  Haven't you seen the pretty lizard?

Also, it is not clear to me that using Mastercoin will require having significant amounts of mastercoins.
Hey! we finally agree on something.  I posted about this a few weeks ago.  If I only have 10 mastercoins, presumably I can divide them each into 1 million pieces (or more) and enjoy use of the entire Mastercoin protocol and all the great functionality it brings on 10 different share issues for example.  Since nobody will ever practically need more than 10 share issues, there is little or no point in owning more than just a few MSC.  Indeed, owning only 1 is probably sufficient as they are practically infinitely divisible. 

J.R. hasn't commented on this point as far as I can tell.

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October 18, 2013, 08:40:24 AM
 #28

None of them. Both try to fill a gap in the concept of a currency ... Bitcoin is not bound to any real asset like gold etc., mc and cc try to change this. But I doubt either this is necessary and both possible.

To be honest, I didn't understood none of them. I struggled some time to understand Bitcoin and think I reached some basic understanding. So, outside a little circle of advanced users neither of them will find people which gain enough trust through understanding to risk anything. Also I don't get it how you would reach  a real connection between coins and assets which is trustworthy enough ...

Personally I like cc a little bit more, cause mc presented itself as "a chance similar to the first bitcoin-mining", which in my view appells too much to greed and naivity to be successfull.

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October 18, 2013, 08:48:04 AM
 #29

None of them. Both try to fill a gap in the concept of a currency ... Bitcoin is not bound to any real asset like gold etc., mc and cc try to change this. But I doubt either this is necessary and both possible.

To be honest, I didn't understood none of them. I struggled some time to understand Bitcoin and think I reached some basic understanding. So, outside a little circle of advanced users neither of them will find people which gain enough trust through understanding to risk anything. Also I don't get it how you would reach  a real connection between coins and assets which is trustworthy enough ...

Personally I like cc a little bit more, cause mc presented itself as "a chance similar to the first bitcoin-mining", which in my view appells too much to greed and naivity to be successfull.
There are different visions about what CC or MC should be used for. For me the main application is company stocks. These require trust in the company anyway, which will be established via traditional means, but it will spare the need to rely on cumbersome, centralized exchanges.


Also, it is not clear to me that using Mastercoin will require having significant amounts of mastercoins.
Hey! we finally agree on something.  I posted about this a few weeks ago.  If I only have 10 mastercoins, presumably I can divide them each into 1 million pieces (or more) and enjoy use of the entire Mastercoin protocol and all the great functionality it brings on 10 different share issues for example.  Since nobody will ever practically need more than 10 share issues, there is little or no point in owning more than just a few MSC.  Indeed, owning only 1 is probably sufficient as they are practically infinitely divisible.  

J.R. hasn't commented on this point as far as I can tell.
So now you understand one of the problems of MSC as an investment. If mastercoins aren't needed in large quantities to use Mastercoin, then the supply of mastercoins will far exceed their demand, meaning the value of mastercoins will be low - even if Mastercoin is successful. An issue which, by the way, I raised 2 months ago.

I agree that JR should comment on that issue.

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October 18, 2013, 08:48:21 AM
 #30

None of them. Both try to fill a gap in the concept of a currency ... Bitcoin is not bound to any real asset like gold etc., mc and cc try to change this. But I doubt either this is necessary and both possible.

To be honest, I didn't understood none of them. I struggled some time to understand Bitcoin and think I reached some basic understanding. So, outside a little circle of advanced users neither of them will find people which gain enough trust through understanding to risk anything. Also I don't get it how you would reach  a real connection between coins and assets which is trustworthy enough ...

Personally I like cc a little bit more, cause mc presented itself as "a chance similar to the first bitcoin-mining", which in my view appells too much to greed and naivity to be successfull.
Well, I guess CC does have its proponents.  However, those who prefer CC are somewhat like this guy.  Not the sharpest tool in the shed.  "To be honest, I didn't understood none of them."  Not to worry ol' chappie - loads of your compatriots similarly didn't understood none of them either.  

OK - sorry to Meni.  I just had to lump you in with this guy despite it being a little unfair.  hehhehehehehehe.
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October 18, 2013, 10:01:44 AM
 #31

I finally found what I was looking for -
RSA Animate - Drive: The surprising truth about what motivates us
An interesting watch.

I'll always have a warm place in my heart for Meni and Alex and the other guys working on colored coins
Thanks JR Smiley

Yeah but some of it is bullcrap. Slaves never had to be rewarded, so if we convince people to work for free what could be better?

At the end of the day people would rather work for rewards than for free when those are the choices (either work for free and not pay your rent, or work for money and pay your rent) and for many in the Bitcoin community that is exactly what the options are.

Rewards alone aren't enough to make you work smarter. You have to get enough sleep, you have to actually enjoy what you're doing and care about what you're doing. Bitcoin offers all of that though. Finally for creative type work or highly intellectual project type work eventually it's not about money anymore. So they are right that you have to pay people enough so they don't have to work for money anymore.

Colored Coin is trying to do something that Mastercoin is trying to do, but with Mastercoin you can get paid and work exclusively on Mastercoin while with Colored Coin you wont be able to quit your day job. What about people who don't have day jobs but who want to work and not have to worry about their bills?

50 Mastercoins are enough Mastercoins so that you'll never have to work again in a few years from now. But the rent is due this month...

None of them. Both try to fill a gap in the concept of a currency ... Bitcoin is not bound to any real asset like gold etc., mc and cc try to change this. But I doubt either this is necessary and both possible.

To be honest, I didn't understood none of them. I struggled some time to understand Bitcoin and think I reached some basic understanding. So, outside a little circle of advanced users neither of them will find people which gain enough trust through understanding to risk anything. Also I don't get it how you would reach  a real connection between coins and assets which is trustworthy enough ...

Personally I like cc a little bit more, cause mc presented itself as "a chance similar to the first bitcoin-mining", which in my view appells too much to greed and naivity to be successfull.
There are different visions about what CC or MC should be used for. For me the main application is company stocks. These require trust in the company anyway, which will be established via traditional means, but it will spare the need to rely on cumbersome, centralized exchanges.


Also, it is not clear to me that using Mastercoin will require having significant amounts of mastercoins.
Hey! we finally agree on something.  I posted about this a few weeks ago.  If I only have 10 mastercoins, presumably I can divide them each into 1 million pieces (or more) and enjoy use of the entire Mastercoin protocol and all the great functionality it brings on 10 different share issues for example.  Since nobody will ever practically need more than 10 share issues, there is little or no point in owning more than just a few MSC.  Indeed, owning only 1 is probably sufficient as they are practically infinitely divisible.  

J.R. hasn't commented on this point as far as I can tell.
So now you understand one of the problems of MSC as an investment. If mastercoins aren't needed in large quantities to use Mastercoin, then the supply of mastercoins will far exceed their demand, meaning the value of mastercoins will be low - even if Mastercoin is successful. An issue which, by the way, I raised 2 months ago.

I agree that JR should comment on that issue.


There are 21 million million Bitcoins that will ever exist.
There are 600 thousand Mastercoins that will ever exist.

I predict each Mastercoin will easily be worth between 20-30 Bitcoins.
But if we want to be conservative each Mastercoin is actually going to be worth at least 1 Bitcoin. Assume that everyone who has at least 1 Bitcoin will want at least 1 Mastercoin and you can easily see that the price of Mastercoins will easily surpass 1:1.

As for the particulars of how much this or that costs in Mastercoin, who knows? But you can be sure when people figure out what they can do, everyone will want some.

I think the balance JR has to reach is to have enough Mastercoins that they wont ever run out, but have it be scarce enough that the value can continue to appreciate over time.

600,000 is a good number, but the main threat I see to Mastercoin value will be from Bitshares. People will probably sell Mastercoins for Bitshares if that idea actually worked as well as they say it will, but it's very possible that Mastercoin could have first mover advantage and work better too.

JR will have to explain the math of Mastercoin, I don't fully understand and my calculations could be way off, but based on my calculations I'm not selling Mastercoins for less than 2 BTC each. The reason is I predict the demand for Mastercoins will be far greater than the demand for Bitcoins. People will be buying Bitcoins in order to buy Mastercoins so they can do certain things which can only be done using Mastercoins.

Whether my math is off or not depends on whether or not Mastercoins are destroyed after use. If they are destroyed bit by bit over time as I understand it then they'll be absolutely deflationary. The rate of that destruction would determine how deflationary and JR has to answer that. In his whitepaper he suggests 1.5 Mastercoins for 1000 Bitcoins. My calculations suggest that everyone will want to own a few Mastercoins and the price would for sure be at least a few Bitcoins probably prior to the launch and could get as high as 30 Bitcoins per Mastercoin depending on how it works.
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October 18, 2013, 10:29:27 AM
 #32

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There are 21 million million Bitcoins that will ever exist.
There are 600 thousand Mastercoins that will ever exist.

I predict each Mastercoin will easily be worth between 20-30 Bitcoins.

This logic is way too simple. As I said - and am "this guy" flamed for it - I don't understand the concept. But to reach this the mastercoins need to develop any real advantage over Bitcoins. As I see it by now it only has disadvantages (its not accepted, you can't sell it on exchanges ....)

Quote
There are different visions about what CC or MC should be used for. For me the main application is company stocks. These require trust in the company anyway, which will be established via traditional means, but it will spare the need to rely on cumbersome, centralized exchanges.

Real-World-Problem. How would you close the right to possess a company stock in cc / mc? You need someone owning it and giving you a contract that this coin represents this share ...

edit: bitcoin' genius is to make the real-world-problem meaningless through mathematics, cause a bitcoin is not bound to anything in the real world, its just a bitcoin, its value doesn't depend on any contract or any item.  cc and mc want to bind a coin to real-world-item, which sounds like a step backward

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October 18, 2013, 10:33:32 AM
 #33

I don't understand both, for me they are all alt-coins  Grin

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October 18, 2013, 10:44:15 AM
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There are different visions about what CC or MC should be used for. For me the main application is company stocks. These require trust in the company anyway, which will be established via traditional means, but it will spare the need to rely on cumbersome, centralized exchanges.

Real-World-Problem. How would you close the right to possess a company stock in cc / mc? You need someone owning it and giving you a contract that this coin represents this share ...

edit: bitcoin' genius is to make the real-world-problem meaningless through mathematics, cause a bitcoin is not bound to anything in the real world, its just a bitcoin, its value doesn't depend on any contract or any item.  cc and mc want to bind a coin to real-world-item, which sounds like a step backward
The founders / traditional shareholders of the company authorize the color definition of course, and they reference and output of theirs as the genesis output. And they are then obligated to pay dividends to holders of the share coins, just like to holders of traditional shares.

Yes, being detached from the real world gives Bitcoin its power, but it limits what it can do. You can use it as a currency and that's it. If you want decentralized digital representation of other assets, you need some real-world connection.

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October 18, 2013, 10:45:22 AM
 #35

This logic is way too simple. As I said - and am "this guy" flamed for it - I don't understand the concept. But to reach this the mastercoins need to develop any real advantage over Bitcoins. As I see it by now it only has disadvantages (its not accepted, you can't sell it on exchanges ....)

Mastercoin has every advantage over Bitcoin theoretically. A Mastercoin can represent damn near anything and any altcoin. It can represent bars of gold, it can represent sheep, it can represent websites being sold, it can represent particular items being sold.

What this means is I could use Mastercoins to sell particular items over a distributed exchange built into the blockchain itself. That means anyone with the wallet and some Mastercoins can use the Mastercoins are blank tokens which can represent anything and then sell those tokens. Think of Mastercoin as like giftcards which you can generate for yourself to sell your specific product. The customers can buy your giftcard from you in person and then redeem in from the blockchain at any time.

Nothing like that has ever existed in the history of mankind. It would change how we all do business. It would allow for barter if we choose, or it could be used as a currency if we choose, or anything we define it as. It can be stocks, it can be bonds, it can be a house, and when you have that much flexibility the demand will definitely be greater than for Bitcoins. If I can sell my car easier with Mastercoins than with Bitcoins then I'll be using Mastercoins. Bitcoins do not have owners but Mastercoins do and you can literally own your own currencies and pay people in that if they are willing to work for your currency.

There are different visions about what CC or MC should be used for. For me the main application is company stocks. These require trust in the company anyway, which will be established via traditional means, but it will spare the need to rely on cumbersome, centralized exchanges.

For me I see Mastercoin as an abstraction layer. Like the shift from going from procedural programming to object oriented. It makes it a lot easier to build future protocols on top of it. Mastercoin is actually the start of increasingly complex protocol layers being built on top of Bitcoin. Something will eventually be built on top of Mastercoin and chances are the people who own Mastercoins will be richly rewarded because there are only 600,000.

Expect JR to be one of the richest men in the world a few years from now or in jail.
Real-World-Problem. How would you close the right to possess a company stock in cc / mc? You need someone owning it and giving you a contract that this coin represents this share ...

If you have smart contracts and smart property, it's really not hard to pass ownership of stocks. That is a problem I could solve with bottle caps. The more interesting thing are the new kinds of exotic contracts which no one can even predict.

edit: bitcoin' genius is to make the real-world-problem meaningless through mathematics, cause a bitcoin is not bound to anything in the real world, its just a bitcoin, its value doesn't depend on any contract or any item.  cc and mc want to bind a coin to real-world-item, which sounds like a step backward

Bitcoin isn't backed by anything or bound to anything. Mastercoin can bind Bitcoins to anything which changes the game entirely. Now you could use Mastercoins to issue your own corporate coin. People can work for your coin and be paid in your products / gift cards. Later on people can exchange these gift cards to get anything they want using a LETS system.

Quote
LETS networks use interest-free local credit so direct swaps do not need to be made. For instance, a member may earn credit by doing childcare for one person and spend it later on carpentry with another person in the same network. In LETS, unlike other local currencies, no scrip is issued, but rather transactions are recorded in a central location open to all members. As credit is issued by the network members, for the benefit of the members themselves, LETS are considered mutual credit systems.

A number of people have problems adjusting to the different ways of operating using a LETSystem. A conventional national currency is generally hard to earn, but easy to spend. To date LETSystems are comparatively easy to earn, but harder to spend.
https://en.wikipedia.org/wiki/Local_exchange_trading_system https://en.wikipedia.org/wiki/Community_Exchange_System

So if my understanding is right, we will see a LETS system built on top of Mastercoin and then the real fun starts.
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October 18, 2013, 04:19:27 PM
 #36

That means anyone with the wallet and some Mastercoins can use the Mastercoins are blank tokens which can represent anything and then sell those tokens. Think of Mastercoin as like giftcards which you can generate for yourself to sell your specific product. The customers can buy your giftcard from you in person and then redeem in from the blockchain at any time.

Nothing like that has ever existed in the history of mankind.
Not sure that nothing has ever existed like this.  What about stem cells?  Mastercoin are the stem cells of currency/value.  They can be morphed over into anything. 
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October 18, 2013, 06:38:09 PM
 #37

Also, it is not clear to me that using Mastercoin will require having significant amounts of mastercoins.
Hey! we finally agree on something.  I posted about this a few weeks ago.  If I only have 10 mastercoins, presumably I can divide them each into 1 million pieces (or more) and enjoy use of the entire Mastercoin protocol and all the great functionality it brings on 10 different share issues for example.  Since nobody will ever practically need more than 10 share issues, there is little or no point in owning more than just a few MSC.  Indeed, owning only 1 is probably sufficient as they are practically infinitely divisible. 

J.R. hasn't commented on this point as far as I can tell.
So now you understand one of the problems of MSC as an investment. If mastercoins aren't needed in large quantities to use Mastercoin, then the supply of mastercoins will far exceed their demand, meaning the value of mastercoins will be low - even if Mastercoin is successful. An issue which, by the way, I raised 2 months ago.

I agree that JR should comment on that issue.

The smart property feature is probably what people are the most excited about right now, but you are right that it probably is the smallest feature in terms of impact on MSC prices. The main benefit to MasterCoin holders will be that you need MSC to buy/sell these smart properties (but not to create them).

Personally, I'm much more excited about some of the other features, but we need to be responsive to what the market wants if we want to remain in the lead. That's why getting smart property features implemented is our top priority right now (we the need distributed exchange first, but that will be directly used to trade smart property).


Expect JR to be one of the richest men in the world a few years from now or in jail.

Wow. I sure hope it won't be jail!

On an unrelated note, I apologize in advance for being unresponsive for the next few days. I've fallen behind on other important responsibilities in my life Smiley

dillpicklechips
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October 19, 2013, 12:55:37 AM
 #38

There are 21 million million Bitcoins that will ever exist.
There are 600 thousand Mastercoins that will ever exist.

I predict each Mastercoin will easily be worth between 20-30 Bitcoins.
But if we want to be conservative each Mastercoin is actually going to be worth at least 1 Bitcoin. Assume that everyone who has at least 1 Bitcoin will want at least 1 Mastercoin and you can easily see that the price of Mastercoins will easily surpass 1:1.

As for the particulars of how much this or that costs in Mastercoin, who knows? But you can be sure when people figure out what they can do, everyone will want some.

I think the balance JR has to reach is to have enough Mastercoins that they wont ever run out, but have it be scarce enough that the value can continue to appreciate over time.

600,000 is a good number, but the main threat I see to Mastercoin value will be from Bitshares. People will probably sell Mastercoins for Bitshares if that idea actually worked as well as they say it will, but it's very possible that Mastercoin could have first mover advantage and work better too.

JR will have to explain the math of Mastercoin, I don't fully understand and my calculations could be way off, but based on my calculations I'm not selling Mastercoins for less than 2 BTC each. The reason is I predict the demand for Mastercoins will be far greater than the demand for Bitcoins. People will be buying Bitcoins in order to buy Mastercoins so they can do certain things which can only be done using Mastercoins.

Whether my math is off or not depends on whether or not Mastercoins are destroyed after use. If they are destroyed bit by bit over time as I understand it then they'll be absolutely deflationary. The rate of that destruction would determine how deflationary and JR has to answer that. In his whitepaper he suggests 1.5 Mastercoins for 1000 Bitcoins. My calculations suggest that everyone will want to own a few Mastercoins and the price would for sure be at least a few Bitcoins probably prior to the launch and could get as high as 30 Bitcoins per Mastercoin depending on how it works.

I believe that is all assuming Mastercoin does something that colored coins can not. I'm not convinced that is the case. If I was a business who wanted to do an IPO why would I choose Mastercoin to represent my shares over colored coins? If both do the same thing, why convert some of my BTC to MC when CC does what I need? Especially since CC allows shareholders to not have to have the whole blockchain for security? If the price of MC gets expensive why choose it? I'd rather pick BTC CC and then it will cost just a few cents a share to start.


It just seems MC hypes a lot of the future potential and people are seeing it as another currency that will have massive demand but they are forgetting that CC has the same potential for everyone and will be dirt cheap because its just uses a few cents worth of BTC to use.

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HammerFist
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October 19, 2013, 07:50:02 AM
 #39

Wow. I sure hope it won't be jail!
For it to be jail, you'll have to do something illegal.  I guess that leaves richest man in the world.  I've got to say, I do believe that Mastercoin does bring more function to society than Microsoft - and today that is where the richest man in the world is from.  So perhaps JR will be donating billions to kids in Africa soon.  Hmmm - cool. 
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October 19, 2013, 05:39:25 PM
 #40

...Microsoft - and today that is where the richest man in the world is from. 

Carlos Slim is from Microsoft?

Anyone with a campaign ad in their signature -- for an organization with which they are not otherwise affiliated -- is automatically deducted credibility points.

I've been convicted of heresy. Convicted by a mere known extortionist. Read my Trust for details.
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