Clearing up 10 Misconceptions about the Mastercoin Protocol

[djohnston]

The Mastercoin Open Source Project has been moving so quickly I wanted to offer more information to clear up some of the most common misconceptions.

* item 1. Misconception - Mastercoin is an "Alt Coin" and was "Pre-Mined"

Truth - The Mastercoin Protocol does not have an "alternative block chain", rather it adds advanced features on top of the existing Bitcoin Protocol and Bitcoin blockchain. As for "pre-mining", in fact the Mastercoins that exist were "minted" by ANYONE in the Bitcoin community who decided to participate in the "minting period" between August 1st and August 31st 2013 by sending Bitcoins to the "Exodus Address".
https://bitcointalk.org/index.php?topic=265488.msg2841328#msg2841328

* item 2. Misconception - The Mastercoin transactions will "bloat or pollute" the Bitcoin blockchain.

This misconception is based on the old way in which the protocol first proposed recording the Mastercoin Transactions into the blockchain (with a fake transaction used for meta data purposes). However, since then the protocol has been updated to support two other ways of adding this meta data, which are preferred. The first is through a Multi Signature process and the second is through the new Provably Prune Able Outputs described in Gavin's update to 0.9 of the Bitcoin reference client. You can read more on this topic by searching Bitcointalk for Class A, Class B, and Class C Mastercoin transaction types.

https://bitcointalk.org/index.php?topic=265488.msg3168372#msg3168372
https://masterchest.info/files/mscappendix_draft.pdf

* item 3. Misconception - J.R. Willet (creator of the MSC Protocol) owns the majority of the Mastercoins.

Truth - Thanks to the many BitAngels and community members who participated in the Exodus Address period (500 people plus), J.R. was diluted to 28% of all Mastercoins (while still the largest participant in the Exodus Address by sending 1,200 BTC) he does not control a majority or even have enough MSC to block a super majority 2/3rds vote of 66.6%.

https://masterchest.info/lookupadd.aspx?address=15WrQhYhHts7jTMoGJ9rDCD12JuCTKy7MM
https://blockchain.info/tx/68c0677e3fc26286d2c83772f6e1f7b4b9e3072008995a884a8c1e943f4dbf99

* item 4. Misconception - J.R. Willet set up the Exodus to send the funds to a Bitcoin Address he owns, therefore he wasn't taking any risk and was just sending funds to himself.

Truth - Thanks to the BitAngels and community members who insisted that there be an incorporated "Mastercoin Foundation" to administer the funds, the Bitcoins which have been raised, are being divided up and sent from J.R.'s address to a variety of addresses administered by the members of the Mastercoin Foundation (7 member Board). J.R. acts as Treasurer by holding only the funds actively needed for distribution to winners of coding competitions and bounties. In fact all expenses are open record via this Google Doc.

http://mastercoinfoundation.org/
https://docs.google.com/spreadsheet/ccc?key=0AtCyUJvk_IyNdGpVcnpBN2tOczFmbVRnck5TWjZuRFE&usp=sharing

* item 5. Misconception - The Mastercoin Foundation will control the distribution of BTC raised and Reward MSC.

Truth - All of the following decisions are moving to a "Proof of Stake" system that is being developed as one of the bounties. A. Which feature a bounty should be offered for next. B. Who Reward Mastercoins should be issued to based on their contribution to the code base. C. If new proposed changes to the Protocol Specification should be merged. This proof of stake system will allow for everyone who owns Mastercoin to develop consensus and "vote" based on their MSC ownership. The Mastercoin Foundation is eager to decentralize decision making, driven by this "Proof of Stake" consensus system.

https://bitcointalk.org/index.php?topic=309729.0

* item 6. Misconception - The Mastercoin Foundation controls the protocol and makes all decisions about its features.

Truth -  The Mastercoin Protocol, clients, and all source code has been open sourced on Github since day one. Anyone is welcome to examine or contribute to the source code, propose protocol changes, develop new features, or improve existing features, provided they get consensus from the Mastercoin Community via the "Proof of Stake" system.

https://github.com/mastercoin-MSC

* item 7. Misconception - The 30 Day Exodus Period was too short a time for the initial Distribution of MSC.

Truth - First, this period has to be taken in context with the more than 1 year long period in which J.R. Willet proposed the Mastercoin Protocol to the community via his white paper, took input from the community, updated the proposal and eventually with much publicity on Bitcoin Talk, Reddit, and via Bitcoin Media opened the Exodus Address for contributions from ANYONE in the Bitcoin community.

Second, as for the specific length of the period, Kick Starter has done a great deal of research on this very topic, of how long in the future, deadlines for participation in community driven initiatives should be. Here is there text from the Kick Starter website recommending why 30 days is the optimal amount of time.

"Setting your project deadline - http://www.kickstarter.com/help/school#setting_your_goal
Funding can last anywhere from one to 60 days, however a longer duration is not necessarily better. Statistically, projects lasting 30 days or less have our highest success rates. A Kickstarter project takes a lot of work to run, and shorter projects set a tone of confidence and help motivate your backers to join the party. Longer durations incite less urgency, encourage procrastination, and tend to fizzle out."

* item 8. Misconception - Some of the Advanced Features of Mastercoin are not technically / economically feasible (specifically the Escrow Based Currencies).

Truth - This misconception is based on an earlier version of the protocol that detailed how Escrow Based Currencies would work, since then better methods have been suggested to make this feature possible including "Contracts for Difference". https://bitcointalk.org/index.php?topic=324830.0

The vast majority of the Mastercoin Protocol features are uncontroversial on a technical basis, including:
A. Transferring MasterCoins
B. Marking an Address as “Savings”
C. Selling MasterCoins for Bitcoins
D. Selling MasterCoins for Other MasterCoin-Derived Currencies
E. Purchasing a Currency Offered For Sale
F. Registering a Data Stream
G. Offering a Future Event Trigger
H. New Smart Property Creation
I. New Currency Creation

* item 9. Misconception - All the Mastercoins have been created, so the early adopter opportunity is over.

Truth - There are lots of ways to get Mastercoins and the early adopter cycle has just begun, here are just a few of the ways to get involved, add value to the eco-system and be an early adopter of Mastercoins:

A. Contribute to the Development of the Mastercoin open source codebase and earn "Development / Reward Mastercoins". https://bitcointalk.org/index.php?topic=292628.400
B. For small amounts of "Test Mastercoins", there is a "Give Away" thread on Bitcoin Talk https://bitcointalk.org/index.php?topic=272577.msg3403599#msg3403599
C. For small amounts of real Mastercoins, there is a Mastercoin Faucet. http://faucet.bitwatch.co/
D. Google Doc Order Book with open buy and sell orders. https://docs.google.com/a/engine.co/spreadsheet/ccc?key=0ApGPLGUd5ZCzdHFxbnhHQjBDSDVKamY5UHlWdkNMNWc&usp=sharing#gid=0
E. Through the private BuyMastercoins.com and other exchanges.
F. Trade BTC for them on the Distributed Exchange http://mastercoin-explorer.com/order_books

* item 10. Misconception - Mastercoin is a fixed protocol and whatever flaws it has will be longterm problems.

Truth - As you can see from the 9 items above the Mastercoin Project has been evolving quickly based on technical feedback, community input, and the developer consensus process. If you have issues with the protocol then please offer productive input on the forums and to the developers involved. Together we can continually improve the Mastercoin Open Source Project and do something great for the Bitcoin community.

https://github.com/mastercoin-MSC

Conclusion:
I'm not proposing that Mastercoin is perfect. I am proposing it is fundamentally built on the same ethics as Bitcoin. It is a fully transparent, decentralized, autonomous, and open source based application being developed on the Bitcoin blockchain.

This project has gathered a great deal of momentum and I sincerely hope more and more members of the Bitcoin community will get involved in developing these advanced features and contribute their time, energy and efforts to improving the Mastercoin Protocol, clients, and eco-system.

For more information visit, http://www.mastercoin.org/

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[TKeenan]

The Mastercoin Open Source Project has been moving so quickly For more information visit, http://www.mastercoin.org/

Good to learn your view of these points. 

[dacoinminster]

Great post, David. Progress on Mastercoin is really blowing my mind!

[bitfreak!]

Thanks to the BitAngels and community members who insisted that there be an incorporated "Mastercoin Foundation" to administer the funds, the Bitcoins which have been raised, are being divided up and sent from J.R.'s address to a variety of addresses administered by the members of the Mastercoin Foundation (7 member Board). J.R. acts as Treasurer by holding only the funds actively needed for distribution to winners of coding competitions and bounties.

Thanks for explaining to me why I should never bother using Mastercoin.

[djohnston]

Did you read the part where we move all the decision making to Proof of Stake consensus?

If you have a better or more transparent way of distributing funds, making protocol decisions, I'm genuinely interested to hear about it.

[Meni Rosenfeld]

* item 4. Misconception - J.R. Willet set up the Exodus to send the funds to a Bitcoin Address he owns, therefore he wasn't taking any risk and was just sending funds to himself.

Truth - Thanks to the BitAngels and community members who insisted that there be an incorporated "Mastercoin Foundation" to administer the funds, the Bitcoins which have been raised, are being divided up and sent from J.R.'s address to a variety of addresses administered by the members of the Mastercoin Foundation (7 member Board). J.R. acts as Treasurer by holding only the funds actively needed for distribution to winners of coding competitions and bounties. In fact all expenses are open record via this Google Doc.

This was done after the fact. J.R. still had an asymmetrical privilege during the issuing.

* item 7. Misconception - The 30 Day Exodus Period was too short a time for the initial Distribution of MSC.

...

Second, as for the specific length of the period, Kick Starter has done a great deal of research on this very topic, of how long in the future, deadlines for participation in community driven initiatives should be. Here is there text from the Kick Starter website recommending why 30 days is the optimal amount of time.

Not a valid comparison. Kickstarter projects are community-funded but are still centralized. If that's what you're going for fine; but you can't honestly call Mastercoin "decentralized", or expect the support of decentralization-enthusiasts, with an issuing period x144 times shorter than the effective period of our model, Bitcoin.

[dacoinminster]

Not a valid comparison. Kickstarter projects are community-funded but are still centralized. If that's what you're going for fine; but you can't honestly call Mastercoin "decentralized", or expect the support of decentralization-enthusiasts, with an issuing period x144 times shorter than the effective period of our model, Bitcoin.

Mastercoin is decentralized in the "bloody hard to shut down" way. I think trying to democratize wealth and opportunity would actually harm our project, so I didn't embrace that type of decentralization.

[TKeenan]

I think trying to democratize wealth and opportunity would actually harm our project, so I didn't embrace that type of decentralization.

Thank god.  This manner of thinking is for failure assurance.  Let Meni and his nonsense go deploy that logic on some other project.  Unfortunately, we at Mastercoin have to sit around here all day while Meni keeps slinging mud on us.  Does anyone know why he bitter on our project?  Can't he find something interesting to spend his time on rather than continued defamation of Mastercoin?

Hey Meni - go back into your 'think tank' and think about snapping out of it.

[Meni Rosenfeld]

I think trying to democratize wealth and opportunity would actually harm our project, so I didn't embrace that type of decentralization.

Thank god.  This manner of thinking is for failure assurance.  Let Meni and his nonsense go deploy that logic on some other project.  Unfortunately, we at Mastercoin have to sit around here all day while Meni keeps slinging mud on us.  Does anyone know why he bitter on our project?  Can't he find something interesting to spend his time on rather than continued defamation of Mastercoin?

Hey Meni - go back into your 'think tank' and think about snapping out of it.

The fact that you perceive my occasional polite and objective comments as "mud slinging" says more about you than about me.

[dacoinminster]

The fact that you perceive my occasional polite and objective comments as "mud slinging" says more about you than about me.

I know for a fact that both Ron and I think Meni is a walking brain and we respect his opinion very much, even when we disagree with him. But, this is the internet, and I guess nobody is immune to getting flames directed at them. I know I get my share

[haightst]

The Mastercoin Open Source Project has been moving so quickly I wanted to offer more information to clear up some of the most common misconceptions.

* item 1. Misconception - Mastercoin is an "Alt Coin" and was "Pre-Mined"

Truth - The Mastercoin Protocol does not have an "alternative block chain", rather it adds advanced features on top of the existing Bitcoin Protocol and Bitcoin blockchain. As for "pre-mining", in fact the Mastercoins that exist were "minted" by ANYONE in the Bitcoin community who decided to participate in the "minting period" between August 1st and August 31st 2013 by sending Bitcoins to the "Exodus Address".
https://bitcointalk.org/index.php?topic=265488.msg2841328#msg2841328

* item 2. Misconception - The Mastercoin transactions will "bloat or pollute" the Bitcoin blockchain.

This misconception is based on the old way in which the protocol first proposed recording the Mastercoin Transactions into the blockchain (with a fake transaction used for meta data purposes). However, since then the protocol has been updated to support two other ways of adding this meta data, which are preferred. The first is through a Multi Signature process and the second is through the new Provably Prune Able Outputs described in Gavin's update to 0.9 of the Bitcoin reference client. You can read more on this topic by searching Bitcointalk for Class A, Class B, and Class C Mastercoin transaction types.

https://bitcointalk.org/index.php?topic=265488.msg3168372#msg3168372
https://masterchest.info/files/mscappendix_draft.pdf

* item 3. Misconception - J.R. Willet (creator of the MSC Protocol) owns the majority of the Mastercoins.

Truth - Thanks to the many BitAngels and community members who participated in the Exodus Address period (500 people plus), J.R. was diluted to 28% of all Mastercoins (while still the largest participant in the Exodus Address by sending 1,200 BTC) he does not control a majority or even have enough MSC to block a super majority 2/3rds vote of 66.6%.

https://masterchest.info/lookupadd.aspx?address=15WrQhYhHts7jTMoGJ9rDCD12JuCTKy7MM
https://blockchain.info/tx/68c0677e3fc26286d2c83772f6e1f7b4b9e3072008995a884a8c1e943f4dbf99

* item 4. Misconception - J.R. Willet set up the Exodus to send the funds to a Bitcoin Address he owns, therefore he wasn't taking any risk and was just sending funds to himself.

Truth - Thanks to the BitAngels and community members who insisted that there be an incorporated "Mastercoin Foundation" to administer the funds, the Bitcoins which have been raised, are being divided up and sent from J.R.'s address to a variety of addresses administered by the members of the Mastercoin Foundation (7 member Board). J.R. acts as Treasurer by holding only the funds actively needed for distribution to winners of coding competitions and bounties. In fact all expenses are open record via this Google Doc.

http://mastercoinfoundation.org/
https://docs.google.com/spreadsheet/ccc?key=0AtCyUJvk_IyNdGpVcnpBN2tOczFmbVRnck5TWjZuRFE&usp=sharing

* item 5. Misconception - The Mastercoin Foundation will control the distribution of BTC raised and Reward MSC.

Truth - All of the following decisions are moving to a "Proof of Stake" system that is being developed as one of the bounties. A. Which feature a bounty should be offered for next. B. Who Reward Mastercoins should be issued to based on their contribution to the code base. C. If new proposed changes to the Protocol Specification should be merged. This proof of stake system will allow for everyone who owns Mastercoin to develop consensus and "vote" based on their MSC ownership. The Mastercoin Foundation is eager to decentralize decision making, driven by this "Proof of Stake" consensus system.

https://bitcointalk.org/index.php?topic=309729.0

* item 6. Misconception - The Mastercoin Foundation controls the protocol and makes all decisions about its features.

Truth -  The Mastercoin Protocol, clients, and all source code has been open sourced on Github since day one. Anyone is welcome to examine or contribute to the source code, propose protocol changes, develop new features, or improve existing features, provided they get consensus from the Mastercoin Community via the "Proof of Stake" system.

https://github.com/mastercoin-MSC

* item 7. Misconception - The 30 Day Exodus Period was too short a time for the initial Distribution of MSC.

Truth - First, this period has to be taken in context with the more than 1 year long period in which J.R. Willet proposed the Mastercoin Protocol to the community via his white paper, took input from the community, updated the proposal and eventually with much publicity on Bitcoin Talk, Reddit, and via Bitcoin Media opened the Exodus Address for contributions from ANYONE in the Bitcoin community.

Second, as for the specific length of the period, Kick Starter has done a great deal of research on this very topic, of how long in the future, deadlines for participation in community driven initiatives should be. Here is there text from the Kick Starter website recommending why 30 days is the optimal amount of time.

"Setting your project deadline - http://www.kickstarter.com/help/school#setting_your_goal
Funding can last anywhere from one to 60 days, however a longer duration is not necessarily better. Statistically, projects lasting 30 days or less have our highest success rates. A Kickstarter project takes a lot of work to run, and shorter projects set a tone of confidence and help motivate your backers to join the party. Longer durations incite less urgency, encourage procrastination, and tend to fizzle out."

* item 8. Misconception - Some of the Advanced Features of Mastercoin are not technically / economically feasible (specifically the Escrow Based Currencies).

Truth - This misconception is based on an earlier version of the protocol that detailed how Escrow Based Currencies would work, since then better methods have been suggested to make this feature possible including "Contracts for Difference". https://bitcointalk.org/index.php?topic=324830.0

The vast majority of the Mastercoin Protocol features are uncontroversial on a technical basis, including:
A. Transferring MasterCoins
B. Marking an Address as “Savings”
C. Selling MasterCoins for Bitcoins
D. Selling MasterCoins for Other MasterCoin-Derived Currencies
E. Purchasing a Currency Offered For Sale
F. Registering a Data Stream
G. Offering a Future Event Trigger
H. New Smart Property Creation
I. New Currency Creation

* item 9. Misconception - All the Mastercoins have been created, so the early adopter opportunity is over.

Truth - There are lots of ways to get Mastercoins and the early adopter cycle has just begun, here are just a few of the ways to get involved, add value to the eco-system and be an early adopter of Mastercoins:

A. Contribute to the Development of the Mastercoin open source codebase and earn "Development / Reward Mastercoins". https://bitcointalk.org/index.php?topic=292628.400
B. For small amounts of "Test Mastercoins", there is a "Give Away" thread on Bitcoin Talk https://bitcointalk.org/index.php?topic=272577.msg3403599#msg3403599
C. For small amounts of real Mastercoins, there is a Mastercoin Faucet. http://faucet.bitwatch.co/
D. Google Doc Order Book with open buy and sell orders. https://docs.google.com/a/engine.co/spreadsheet/ccc?key=0ApGPLGUd5ZCzdHFxbnhHQjBDSDVKamY5UHlWdkNMNWc&usp=sharing#gid=0
E. Through the private BuyMastercoins.com and other exchanges.
F. Trade BTC for them on the Distributed Exchange http://mastercoin-explorer.com/order_books

* item 10. Misconception - Mastercoin is a fixed protocol and whatever flaws it has will be longterm problems.

Truth - As you can see from the 9 items above the Mastercoin Project has been evolving quickly based on technical feedback, community input, and the developer consensus process. If you have issues with the protocol then please offer productive input on the forums and to the developers involved. Together we can continually improve the Mastercoin Open Source Project and do something great for the Bitcoin community.

https://github.com/mastercoin-MSC

Conclusion:
I'm not proposing that Mastercoin is perfect. I am proposing it is fundamentally built on the same ethics as Bitcoin. It is a fully transparent, decentralized, autonomous, and open source based application being developed on the Bitcoin blockchain.

This project has gathered a great deal of momentum and I sincerely hope more and more members of the Bitcoin community will get involved in developing these advanced features and contribute their time, energy and efforts to improving the Mastercoin Protocol, clients, and eco-system.

For more information visit, http://www.mastercoin.org/

_!_Sounds like an easy way to corrupt or mess up the blockchain with non-bitcoin (altcoin) data? ~ tell me how i'm off base as it rides on top of, and depends on the bitcoin blockchain to work right? ,,, and say if it works>> isn't it only a matter of time when 10 copycats spring out of nowhere!?
   ~not to mention there is already a coin called "Mastercoin" trading on the exchanges!
->/\MST!<-(*i've been buying these x1O like crazy)...zzz hello? ...i'm confused!

https://www.cryptsy.com/markets/view/62