Comment: for everything else ... there's mastercoin

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In reply to comment: Mastercoin has a lot of promise.. (see in situ)

for everything else ... there's mastercoin

It's hard to see how mastercoin is going to replace exchanges. Exchanges are still useful for exchanging other currencies such as dollars or yuan for digital currencies. Converting between BTC and MSC is built into mastercoin but an exchange is still useful if you wanted to convert to or from LTC or any others.

The kind of digital currency you can create with mastercoin is very different from the first wave of digital currencies like litecoin and all the rest:
The example they use to explain it is intriguing -- a digital currency pegged to the price of gold. A new currency, goldcoin, would be created within the mastercoin protocol. A "data source" is also defined, derived from a trusted source, and controlled by the creator of the new digital currency. So for gold, you'd have a data stream that provides the price of gold and periodically stores the current price in the blockchain. Then the mastercoin protocol creates or destroys goldcoins whenever the exchange rate differs by more than some threshold from the target rate defined by the trusted data source. By controlling the supply this way, backed up by an escrow account funded with mastercoins, they claim they'll be able to peg the price of goldcoin to the spot price of gold without having any physical gold involved.

That would be amazingly good if it were possible. A digital currency pegged to the price of gold would be good for gold, good for the digital currency pegged to gold, and bad for fiat currencies all over the world. But I'm skeptical that this scheme would actually work. The creator of the new currency controls the data source, and can change it at any time. Manipulating the supply should move the price over the long run but it's not instantaneous so the price could get badly out of synch. The whole idea of a currency pegged to the price of gold, without any physical gold involved, seems very questionable.

They're trying something ambitious, and there are lots of innovative ideas in there which is a lot more interesting than most alt coins. The idea of piggybacking on bitcoins blockchain alone is a game changer and I wouldn't be surprised to see a new wave of alt coins popping up that do the same thing -- for the price of the transaction fees you've got an instant network. They've got a fair amount of funding so they're going to be able to pay developers. Lots of reasons to keep an eye on them.