MasterCoin Introduction

MasterCoin

[email protected]

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?

[email protected]