This article talks about the fundamentals and history of Mastercoin — the first altcoin. Also, you’ll know how Mastercoin later became Omni.
Mastercoin was the first ever solution for bitcoin 2.0 for using this technology to make safe and protected transactions. This resulted in new possibilities for the crypto industry and market. Simply put, if you want to learn how the crypto industry evolved in the last few years, you also need to learn what is Mastercoin.
With the emergence of Mastercoin, several other similar advanced technologies surfaced, which included Tether, Factom, and even its competitor Counterparty. All of these offers innovative services to their clientele while making them worry-free about the bitcoin blockchain safety concerns.
Even though there is a huge number of unique products that use the Mastercoin podium, there has been a chain of disputes that have tainted its reputation. This resulted in bringing Counterparty to the front as the best technology in enhancer space.
As the project received a lot of negative press and suspicion at the beginning, the team behind the project decided to re-brand it with a new name. In 2015, the team decided on a new name in the hopes that this re-branding will leave everything behind. Now, we know it as Omni.
Let’s take a detailed look at what is Mastercoin, who created it, and learn about its journey from Mastercoin to Omni.
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What is Mastercoin?
So, you do know now that Mastercoin is based on Bitcoin blockchain, but what is Mastercoin?
It is a form of digital coinage and communications protocol. The project is mainly intended to allow complex financial tasks in a cryptocurrency. The planned features of Mastercoin encompass the expansion of a distributed tradeoff along with the application of smart assets and savings wallets.
What is Mastercoin’s Inception Story?
The first ever draft of the project was released as a whitepaper in the first month of 2012. In that draft, the founder of Mastercoin J.R Willett suggested that it is possible to build new currency layers with new procedures by using existing Bitcoin at the protocol level. The whitepaper further said that it is possible without altering the bitcoin groundwork or having to generate a substitute technology for taking care of new rules.
This proposal by Willett, not only opened a forum for discussion on this topic, but it also aided in addressing numerous problems. Some example are —
- Promotion of Bitcoin stability by issuing new currencies that have progressed into contracts for modification
- Profiting owners of Bitcoin through the addition of further value to this technology
- Devising a system for financing and software expansion
- Promotion and upkeep of the new protocol level(s)
- Finding means to assist those who adopt this technology early financially
This new protocol level was meant to allow the Bitcoin users to generate new smart contracts without leaving the Bitcoin set-up. A smart contract protocol that is reinforced using Mastercoin encapsulates the authentication and implementation of contracts. This ends up allowing the virtual exchange of smart assets like bonds, shares, landed property, and more.
Read More: What is an Altcoin?
New Version of the Whitepaper
The very next year, on the last day of July, another version of that whitepaper was issued, which came with an appeal for fundraising to execute the project. A Bitcoin Exodus address started to encourage more people to invest. Everyone who sent Bitcoins to this address by the end of August 2013, ended up receiving 100 times that amount in the form of Mastercoins. In addition, some of them also received additional Mastercoins as a bonus for early adoption.
The plan further includes generating an incentive Mastercoin for every ten Mastercoins. It was then intended to be gradually sent to that very Exodus account over the coming years for making sure that the founder and team have enough funds to raise the worth of their coinage.
This policy not only stirred many debates and received a lot of disapproval, but it also shifted everyone’s focus on why Counterparty had chosen to get started using proof of stake. However, over the course of time, Mastercoin turned out to be successful. Using that success, Willett requested people to send reserves to his wallet for an experimental product while assuring them that they can trust him with their money.
The entire story drew a lot of attention. An important thing to bear in mind here is that Mastercoin has never been proven to misuse any of the funds as it keeps its financial report open to the public.
The Journey from Idea to Investment
The first ever transaction through Mastercoin took place in August 2013, on the 15th of August to be precise, when a test Mastercoin was sent to CryptoBegger. Until that time, the team had already received a handsome amount in their Exodus account for investment purposes. The people who sent the funds included the project creator and numerous other individuals. But, the most significant chunk of that investment starting pouring in after the mid of August, right after the Mastercoin BitAngel’s presentation.
The project managed to raise up to almost 4740 BTC which generated more than 0.56 million MSC. It was then planned to devolve an additional 10% of that opening amount for the expansion of Mastercoins over a certain period. However, there is no generation of MSC from that very Exodus account.
Launch and Board Members of Mastercoin
The project began soon after in September with a total of 7-panel members who were volunteering for the project. A few of those members included J.R. Willett, Ron Gross, Brock Pierce, and Sam Onat Yilmaz.
The primary job of the panel/board was and is to direct and take on tactical judgments and partnerships, support rewards as per the recommendations of the community, and to carefully watch over not only the overall financial plan but also the employment of the active staff. The board efficiently took care of all these tasks.
Now, the board has a new path to follow. It is enthusiastically working to reduce its provisional fundamental part in the project. This includes both the regulation of Mastercoin Spec and granting of the rewards. The board is scheduling these things to be entirely controlled by the community through the proof of stake polling. This will enable the coin holders to completely regulate the progress and expansion of not only the protocol but also of the linked software.
Who Can Use Mastercoin?
To further know what is Mastercoin, it is essential to understand that it holds the honor of being the first ever name in the altcoin category enhancers. No other coin before it made any effort to generate any such app by fueling the growth of entirely different blockchain technology.
However, Mastercoin still lacked popularity and common use. According to Mr. Willett, there are several reasons for this, like:
- Financial competition with Bitcoins
- Misinterpretation of their global message
- The weakening of their efforts
So, what is Mastercoin’s purpose and what does it do?
Well, it’s pretty simple. First off, you must know that the project is for everyone, be it an individual or an enterprise. Mastercoin enables its users to generate user allotted resources that are mostly in the form of tokens. These tokens may represent any value, for example, goods, information, stocks, and more.
Many innovative firms use this protocol in their own way to fuel the economy of their companies. A few noteworthy examples of those include MaidSafe and Tether.
The utilization of the tokens is easy to understand. You can do so by taking a quick look at Tether. The coins of this project represent the actual currencies, like yen, dollars, etc., in the digital form. Obviously, these coins are supported by actual resources that are in possession of Tether.
One of the notable things about Tether is its honesty and transparency. They are always open to audits for the demonstration of their entire capitals, so it is very trustworthy.
You can exchange the tokens for cash using the Tether podium. For storing Tether, you can also use any HD wallet. If not, there are a few Bitcoin wallets as well that offer this option. This enables the currency to remain safe and secure in a completely safe environment. Moreover, it also allows the users to convert it into Bitcoin any time they want immediately.
Coming towards MaidSafe, it provides a hard drive storing interchange that allows the users to trade their additional storage space with other people who need a place to store their files. For selling the storage space, the unit of transaction is SafeCoin. Mastercoin operates the SafeCoin.
This founder of MaidSafe, David Irvine, planned to collect funds through the crowd sale of Mastercoin, of which 400 million SafeCoins were generated for an estimated total selling price of 8 million USD.
Since this was a pretty unique and innovative idea at that time, it caused a lot of problems, to say the least. The thing to keep in mind here is that, unlike today, public/crowd sale used to be an alien concept back then. Plus, the implementation of the idea played a significant role in tarnishing Mastercoin’s repute.
The sale declared a guaranteed reward for purchasing Safecoin with Mastercoin instead of Bitcoin for augmenting the nonexistent selling volume of Mastercoins. Irvine was of the opinion that there would be at least 25% of market capitalization in the Mastercoins allowed for crowd sale.
The reward offer ended up accumulating a large sum of Mastercoins and Bitcoins having a value of 7 million dollars, which momentarily elevated the worth. As a result, the majority of the early adopters of Mastercoin dumped their coinage on Irvine. This left him with millions of illiquid money and valueless MSC, which he still owns.
However, he still managed to gather Bitcoins having a value of 3 million dollars. He uses this money for financing the MaidSafe operations.
From Mastercoin to Omni: Rebranding & Competition
The reputational concerns caused by SafeCoin pushed Mastercoin to change its name to Omni in 2015. However, by that time, another challenge was ready for Mastercoin in the form of its budding competitor named Counterparty. After its emergence, Counterparty instantly captured the market, leaving Omni behind.
According to an interview by the Omni team, their primary flaw lied in their messaging, which provided Counterparty an edge over them. While they did mention some of the noteworthy apps using their project, the suspicion issues still remained unsolved.
Coming back to Omni, its role is as a podium that serves distributed protocols like Factom. The link between Omni layer and Bitcoin is that the prior one serves as the app layer to the basic channel and internet layer of TCP or IP.
What is Omni’s Future Planning?
Omni is planning to make better use of the partner, Factom’s technology. This technology enables secure storage of huge chunks of data on the blockchain. It uses nothing but a hash sent every 10 minutes. Mastercoin aims to use it for sending network trading data to the bitcoin blockchain.
This will not only minimize the trade costs but also diminish the chances of blockchain bloating because of Mastercoin.
Bottom Line: What is Mastercoin (Omni)?
Omni was indeed the first ever enhancer technology in the Blockchain world. The idea was groundbreaking, but it faced a few mistakes here and there. Unfortunately, that was enough to ruin its standing. These initial mistakes also paved the way for its competitor, Counterparty, to take up the top spot. Even the name change couldn’t do much.
Considering all that, it’s hard to anticipate what is Omni’s future. Even though Omni has come up with numerous exciting technologies which could be really interesting to use, it is hard to predict if they would be able to stop people from shifting to the competitor or not. Being a small market, there isn’t enough competition that can let both contestants thrive. Therefore, you can expect one of the projects to eventually vanish from space in the near future. For further details, you can visit Omni’s twitter handle and the Mastercoin site.
If you want to have a better understanding of the fundamental concepts of blockchain technology, you should take a look at this free blockchain course.
*Disclaimer: The article should not be taken as, and is not intended to provide any investment advice. Claims made in this article do not constitute investment advice and should not be taken as such. Do your own research!