New currency, same blockchain?

Altcoins such as Litecoin and Ripple have proliferated since Bitcoin’s creation back in 2009, but J.R. Willet thinks his currency protocol can work as an add-on to Bitcoin’s blockchain.

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New currency, same blockchain?

Altcoins such as Litecoin and Ripple have proliferated since Bitcoin’s creation back in 2009, but J.R. Willet thinks his currency protocol can work as an add-on to Bitcoin’s blockchain.

Willet’s creation, called MasterCoin, would essentially rest on top of Bitcoin, and currencies created via the protocol would all tie back to the original blockchain.

This keeps altcoin users from competing financially with Bitcoin and “dilute our efforts,” he said.

This allows anyone to create a coin that serves as an analog to an existing currency or commodity — say gold or a US dollar.

Supply of each coin would be held in check with an escrow fund build into the coin’s protocol. If the value of the “commodity coin” surges up too high, the escrow fund will create new coins against MasterCoins. The reverse happens if the value dips too low, and coins will be destroyed.

MasterCoin would also create “savings addresses,” which would allow for reverse transactions, something Bitcoin does not do.

One big problem MasterCoin could cause would be on the blockchain itself. For lower level currencies’ creation, a tiny transaction called a “fake address” will have to be made on the Bitcoin blockchain. At scale, that could completely clutter Bitcoin’s blockchain.

Willet acknowledges this but says it is something that Bitcoin will have to face “sooner or later anyway.”

He has created what he has called the “Exodus Address,” which would effectively be MasterCoin’s genesis block. Anyone who wants to fund his project can donate to the Exodus Address; anyone doing so before August 31 will receive their donation back 100-fold in MasterCoins.

The Exodus Address is 1EXoDusjGwvnjZUyKkxZ4UHEf77z6A5S4P.

 

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