mastercoin introduction
DESCRIPTION
As given in the Israeli Bitcoin Meetup in August 2013. See this Hebrew video: https://www.youtube.com/watch?v=R-9-aGeapkU&feature=youtu.beTRANSCRIPT
MasterCoin
Some History
• Jan 2012 – MasterCoin 0.5
• Nov 2012 – Colored Coins
• Feb 2013 – Ripple
• August 2013 – MasterCoin 1.0
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
MasterCoin Features
• Saving Accounts
• Distributed Currency Exchange
• Forex Price Feeds
• Betting
• Backed Currencies
Saving Account
Saving Account
• Mark address as “saving”
Saving Account
• Mark address as “saving”
• Transfers from this address will be reversible(for a period of time)
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
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
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
Derived Currencies
Currency Exchange
• Anyone can publish Buy/Sell offers
“Willing to sell 100 MSC for 1.5 BTC”
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
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
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
Betting
• Users can publish bets:
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
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
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
Backed Currencies
Backed Currencies
• Users can create currencies that are backed by other currencies
Backed Currencies
• Users can create currencies that are backed by other currencies
• This is done via an escrow fund
Backed Currencies
• Users can create currencies that are backed by other currencies
• This is done via an escrow fund
• Fund tracks a price feed
Backed Currencies
ESCROWFUND
Backed Currencies
ESCROWFUND I want to buy
some Gold!
Backed Currencies
ESCROWFUND
Backed Currencies
ESCROWFUND
Gold was created out of thin air!
Backed Currencies
ESCROWFUND
Backed Currencies
ESCROWFUND I want to sell
some Gold!
Backed Currencies
ESCROWFUND
Gold is destroyed
Backed Currencies
ESCROWFUND
Backed Currencies
• Escrow fund buys low and sells high
Backed Currencies
• Escrow fund buys low and sells high
• First, it lets the market fix the price
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
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
Backed Currencies
BidAskFeed
Backed Currencies
BidAskFeed
Escrow Fund kicks in
Implementation
• Bitcoin addresses:– Can hold MasterCoin– … and other MSC-based currencies
Implementation
• Bitcoin addresses:– Can hold MasterCoin– … and other MSC-based currencies
• Operations (authorized by private key):– Send currency– New specialized operations
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
Encoding
• Operations are encoded like TCP-IP
• Split into 20 byte packets
• Use sequence numbers for ordering
Issuing MasterCoins
Issuing MasterCoins
• MasterCoins are not mined
Issuing MasterCoins
• MasterCoins are not mined
• Instead, it uses a Kickstarter-like bootstrap
Issuing MasterCoins
• MasterCoins are not mined
• Instead, it uses a Kickstarter-like bootstrap
• The protocol designates a special“exodus address”– 1EXoDusjGwvnjZUyKkxZ4UHEf77z6A5S4P– Firstbits: 1exodus
Issuing MasterCoins
• Willet / MasterCoin Foundation controls 1Exodus
Issuing MasterCoins
• Willet / MasterCoin Foundation controls 1Exodus
• Funds are used to pay for the project’s development
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
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
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
Protocol Development
• Bounties will be placed for various tasks
Protocol Development
• Bounties will be placed for various tasks
• Graphical / website design
Protocol Development
• Bounties will be placed for various tasks
• Graphical / website design
• Economic design
Protocol Development
• Bounties will be placed for various tasks
• Graphical / website design
• Economic design
• Coding
Project Status
• 2,138 BTC raised (1,222 belong to Willet)
Project Status
• 2,138 BTC raised (1,222 belong to Willet)
• Economic features debated
Project Status
• 2,138 BTC raised (1,222 belong to Willet)
• Economic features debated
• Software development started– Experimental!
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)
Roadmap
• Sep 2013 – fundraiser ends
• Design website, logo
• Implement core features
• Experiment with user currencies
New Features
• MasterCoin is a platform
• Its “killer feature” might be unknown yet
• New features will be added in the future
References
• mastercoin.org
• Google Group
• MasterCoin 1.0 specification
• Investment Risks
• Colored Coins whitepaper
• 1Exodus
Questions?