MasterCoin Introduction
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Mastercoin is a programmable layer built on Bitcoin, designed for user-generated currencies and features like saving accounts, currency exchange, and betting. It operates through an escrow system for backed currencies and uses a crowdfunding model rather than mining to issue its currency. The project is ongoing, with plans for further development and implementation of additional features.
MasterCoin Introduction
- 2. Some History • Jan 2012 – MasterCoin 0.5 • Nov 2012 – Colored Coins • Feb 2013 – Ripple • August 2013 – MasterCoin 1.0
- 3. MasterCoin Is • A new crypto-currency, but not a fork/alt • A new programmable layer over Bitcoin • A platform for user-generated currencies • Still evolving
- 4. MasterCoin Features • Saving Accounts • Distributed Currency Exchange • Forex Price Feeds • Betting • Backed Currencies
- 6. Saving Account • Mark address as “saving”
- 7. Saving Account • Mark address as “saving” • Transfers from this address will be reversible (for a period of time)
- 8. Saving Account • Mark address as “saving” • Transfers from this address will be reversible (for a period of time) • A second “Guardian address”: Can reverse any payment from the saving
- 9. Saving Account • Mark address as “saving” • Transfers from this address will be reversible (for a period of time) • A second “Guardian address”: Can reverse any payment from the saving • Guardian address should be secure
- 10. Saving Account • Mark address as “saving” • Transfers from this address will be reversible (for a period of time) • A second “Guardian address”: Can reverse any payment from the saving • Guardian address should be secure • Users should not accept reversible TX
- 12. Currency Exchange • Anyone can publish Buy/Sell offers “Willing to sell 100 MSC for 1.5 BTC”
- 13. Currency Exchange • Anyone can publish Buy/Sell offers “Willing to sell 100 MSC for 1.5 BTC” • If the offer is matched, the MSC is automatically transferred
- 14. Currency Exchange • Anyone can publish Buy/Sell offers “Willing to sell 100 MSC for 1.5 BTC” • If the offer is matched, the MSC is automatically transferred • Works for any currency derived from MSC
- 15. Price Feeds • Anyone (e.g. Forex companies) can publish price feeds for user-generated currencies: – “Price of USD in Bitcoin today is 0.01” – “Price of Gold in USD today is 1392” • Users will choose reliable price feeds
- 16. Betting • Users can publish bets:
- 17. Betting • Users can publish bets: I want to bet €200 with 2:1 odds that the price of Gold will not pass $1500 in the next 30 days
- 18. Betting • Users can publish bets: • Other users accept them I want to bet €200 with 2:1 odds that the price of Gold will not pass $1500 in the next 30 days
- 19. Betting • Users can publish bets: • Other users accept them • Bets are locked in and settled by the MasterCoin protocol I want to bet €200 with 2:1 odds that the price of Gold will not pass $1500 in the next 30 days
- 21. Backed Currencies • Users can create currencies that are backed by other currencies
- 22. Backed Currencies • Users can create currencies that are backed by other currencies • This is done via an escrow fund
- 23. Backed Currencies • Users can create currencies that are backed by other currencies • This is done via an escrow fund • Fund tracks a price feed
- 25. Backed Currencies ESCROW FUND I want to buy some Gold!
- 27. Backed Currencies ESCROW FUND Gold was created out of thin air!
- 29. Backed Currencies ESCROW FUND I want to sell some Gold!
- 30. Backed Currencies ESCROW FUND Gold is destroyed
- 32. Backed Currencies • Escrow fund buys low and sells high
- 33. Backed Currencies • Escrow fund buys low and sells high • First, it lets the market fix the price
- 34. Backed Currencies • Escrow fund buys low and sells high • First, it lets the market fix the price • Only after a few days of divergence, it takes action
- 35. Backed Currencies • Escrow fund buys low and sells high • First, it lets the market fix the price • Only after a few days of divergence, it takes action • A self-fulfilling prophecy
- 38. Implementation • Bitcoin addresses: – Can hold MasterCoin – … and other MSC-based currencies
- 39. Implementation • Bitcoin addresses: – Can hold MasterCoin – … and other MSC-based currencies • Operations (authorized by private key): – Send currency – New specialized operations
- 40. Encoding • Operations are encoded on the Bitcoin blockchain • Uses “fake Bitcoin TX”, each hold 20 data bytes • The fake ops are interpreted by the MasterCoin layer
- 41. Encoding • Operations are encoded like TCP-IP • Split into 20 byte packets • Use sequence numbers for ordering
- 43. Issuing MasterCoins • MasterCoins are not mined
- 44. Issuing MasterCoins • MasterCoins are not mined • Instead, it uses a Kickstarter-like bootstrap
- 45. Issuing MasterCoins • MasterCoins are not mined • Instead, it uses a Kickstarter-like bootstrap • The protocol designates a special “exodus address” – 1EXoDusjGwvnjZUyKkxZ4UHEf77z6A5S4P – Firstbits: 1exodus
- 46. Issuing MasterCoins • Willet / MasterCoin Foundation controls 1Exodus
- 47. Issuing MasterCoins • Willet / MasterCoin Foundation controls 1Exodus • Funds are used to pay for the project’s development
- 48. Issuing MasterCoins • Willet / MasterCoin Foundation controls 1Exodus • Funds are used to pay for the project’s development • Users get MSC reward for investing in 1Exodus
- 49. Issuing MasterCoins • Willet / MasterCoin Foundation controls 1Exodus • Funds are used to pay for the project’s development • Users get MSC reward for investing in 1Exodus • Investment period – August 1-31, 2013
- 50. Issuing MasterCoins • Willet / MasterCoin Foundation controls 1Exodus • Funds are used to pay for the project’s development • Users get MSC reward for investing in 1Exodus • Investment period – August 1-31, 2013 No new MSC after Sep 2013
- 51. Protocol Development • Bounties will be placed for various tasks
- 52. Protocol Development • Bounties will be placed for various tasks • Graphical / website design
- 53. Protocol Development • Bounties will be placed for various tasks • Graphical / website design • Economic design
- 54. Protocol Development • Bounties will be placed for various tasks • Graphical / website design • Economic design • Coding
- 55. Project Status • 2,138 BTC raised (1,222 belong to Willet)
- 56. Project Status • 2,138 BTC raised (1,222 belong to Willet) • Economic features debated
- 57. Project Status • 2,138 BTC raised (1,222 belong to Willet) • Economic features debated • Software development started – Experimental!
- 58. Project Status • 2,138 BTC raised (1,222 belong to Willet) • Economic features debated • Software development started – Experimental! • Control of 1Exodus undecided (currently Willet sole controller)
- 59. Roadmap • Sep 2013 – fundraiser ends • Design website, logo • Implement core features • Experiment with user currencies
- 60. New Features • MasterCoin is a platform • Its “killer feature” might be unknown yet • New features will be added in the future
- 61. References • mastercoin.org • Google Group • MasterCoin 1.0 specification • Investment Risks • Colored Coins whitepaper • 1Exodus