MasterCoin
ron@bitblu.com
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-ge...
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 seco...
Saving Account
• Mark address as “saving”
• Transfers from this address will be reversible
(for a period of time)
• A seco...
Saving Account
• Mark address as “saving”
• Transfers from this address will be reversible
(for a period of time)
• A seco...
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, th...
Currency Exchange
• Anyone can publish Buy/Sell offers
“Willing to sell 100 MSC for 1.5 BTC”
• If the offer is matched, th...
Price Feeds
• Anyone (e.g. Forex companies) can publish
price feeds for user-generated currencies:
– “Price of USD in Bitc...
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 ...
Betting
• Users can publish bets:
• Other users accept them
I want to bet €200 with 2:1 odds that the price of Gold
will n...
Betting
• Users can publish bets:
• Other users accept them
• Bets are locked in and settled by the
MasterCoin protocol
I ...
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
• Fu...
Backed Currencies
ESCROW
FUND
Backed Currencies
ESCROW
FUND I want to buy
some Gold!
Backed Currencies
ESCROW
FUND
Backed Currencies
ESCROW
FUND
Gold was created
out of thin air!
Backed Currencies
ESCROW
FUND
Backed Currencies
ESCROW
FUND I want to sell
some Gold!
Backed Currencies
ESCROW
FUND
Gold is destroyed
Backed Currencies
ESCROW
FUND
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 ...
Backed Currencies
• Escrow fund buys low and sells high
• First, it lets the market fix the price
• Only after a few days ...
Backed Currencies
Bid
Ask
Feed
Backed Currencies
Bid
Ask
Feed
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 p...
Encoding
• Operations are encoded on the Bitcoin
blockchain
• Uses “fake Bitcoin TX”, each hold 20 data bytes
• The fake o...
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 ...
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
developmen...
Issuing MasterCoins
• Willet / MasterCoin Foundation controls 1Exodus
• Funds are used to pay for the project’s
developmen...
Issuing MasterCoins
• Willet / MasterCoin Foundation controls 1Exodus
• Funds are used to pay for the project’s
developmen...
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
– Ex...
Project Status
• 2,138 BTC raised (1,222 belong to Willet)
• Economic features debated
• Software development started
– Ex...
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 fu...
References
• mastercoin.org
• Google Group
• MasterCoin 1.0 specification
• Investment Risks
• Colored Coins whitepaper
• ...
Questions?
ron@bitblu.com
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MasterCoin Introduction

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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.be

Published in: Economy & Finance, Technology
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MasterCoin Introduction

  1. 1. MasterCoin ron@bitblu.com
  2. 2. Some History • Jan 2012 – MasterCoin 0.5 • Nov 2012 – Colored Coins • Feb 2013 – Ripple • August 2013 – MasterCoin 1.0
  3. 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. 4. MasterCoin Features • Saving Accounts • Distributed Currency Exchange • Forex Price Feeds • Betting • Backed Currencies
  5. 5. Saving Account
  6. 6. Saving Account • Mark address as “saving”
  7. 7. Saving Account • Mark address as “saving” • Transfers from this address will be reversible (for a period of time)
  8. 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. 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. 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
  11. 11. Derived Currencies
  12. 12. Currency Exchange • Anyone can publish Buy/Sell offers “Willing to sell 100 MSC for 1.5 BTC”
  13. 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. 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. 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. 16. Betting • Users can publish bets:
  17. 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. 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. 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
  20. 20. Backed Currencies
  21. 21. Backed Currencies • Users can create currencies that are backed by other currencies
  22. 22. Backed Currencies • Users can create currencies that are backed by other currencies • This is done via an escrow fund
  23. 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
  24. 24. Backed Currencies ESCROW FUND
  25. 25. Backed Currencies ESCROW FUND I want to buy some Gold!
  26. 26. Backed Currencies ESCROW FUND
  27. 27. Backed Currencies ESCROW FUND Gold was created out of thin air!
  28. 28. Backed Currencies ESCROW FUND
  29. 29. Backed Currencies ESCROW FUND I want to sell some Gold!
  30. 30. Backed Currencies ESCROW FUND Gold is destroyed
  31. 31. Backed Currencies ESCROW FUND
  32. 32. Backed Currencies • Escrow fund buys low and sells high
  33. 33. Backed Currencies • Escrow fund buys low and sells high • First, it lets the market fix the price
  34. 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. 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
  36. 36. Backed Currencies Bid Ask Feed
  37. 37. Backed Currencies Bid Ask Feed Escrow Fund kicks in
  38. 38. Implementation • Bitcoin addresses: – Can hold MasterCoin – … and other MSC-based currencies
  39. 39. Implementation • Bitcoin addresses: – Can hold MasterCoin – … and other MSC-based currencies • Operations (authorized by private key): – Send currency – New specialized operations
  40. 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. 41. Encoding • Operations are encoded like TCP-IP • Split into 20 byte packets • Use sequence numbers for ordering
  42. 42. Issuing MasterCoins
  43. 43. Issuing MasterCoins • MasterCoins are not mined
  44. 44. Issuing MasterCoins • MasterCoins are not mined • Instead, it uses a Kickstarter-like bootstrap
  45. 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. 46. Issuing MasterCoins • Willet / MasterCoin Foundation controls 1Exodus
  47. 47. Issuing MasterCoins • Willet / MasterCoin Foundation controls 1Exodus • Funds are used to pay for the project’s development
  48. 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. 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. 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. 51. Protocol Development • Bounties will be placed for various tasks
  52. 52. Protocol Development • Bounties will be placed for various tasks • Graphical / website design
  53. 53. Protocol Development • Bounties will be placed for various tasks • Graphical / website design • Economic design
  54. 54. Protocol Development • Bounties will be placed for various tasks • Graphical / website design • Economic design • Coding
  55. 55. Project Status • 2,138 BTC raised (1,222 belong to Willet)
  56. 56. Project Status • 2,138 BTC raised (1,222 belong to Willet) • Economic features debated
  57. 57. Project Status • 2,138 BTC raised (1,222 belong to Willet) • Economic features debated • Software development started – Experimental!
  58. 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. 59. Roadmap • Sep 2013 – fundraiser ends • Design website, logo • Implement core features • Experiment with user currencies
  60. 60. New Features • MasterCoin is a platform • Its “killer feature” might be unknown yet • New features will be added in the future
  61. 61. References • mastercoin.org • Google Group • MasterCoin 1.0 specification • Investment Risks • Colored Coins whitepaper • 1Exodus
  62. 62. Questions? ron@bitblu.com

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