We use a lot of fancy techno-words trying to describe a lot of the functions and possibilities with Bitcoin. Yet it is really simple. Virtually anything can be turned into a “coin” using Master Protocol.
Our universe is filled with objects, real or imaginary. Those objects can be transferred, they can also be transformed or grouped together.
We can coinify private and public objects by agreement; get them all aboard the Bitcoin boat. Here are a few simplified examples to get you thinking about the possibilities:
Case 1: Commodities
Imagine that you are a farmer in Australia, like honestbeef who already accepts bitcoins for quality grass-fed beef. You want to expand your operations by another 1 head of cattle each week for the next 2 years but the bank wants astronomically high interest because farming is a risky commodity business; and on top of that the bank wants to use the family farm as collateral if you miss a few payments (see Dust Bowl 1930s).
With Master Protocol you can create a “smart property” and make an offering that stipulates the proceeds will be used to purchase and care for one calf (a smart property calf named “Betsy”) until the time it is sold. Let’s also give Betsy a Bitcoin vanity address of 1BetsytheCow. The offering further stipulates that holders will be paid a dividend from revenue sent to 1BetsytheCow when Betsy is auctioned off.
You offer Betsy to the market at a rate were you would make a healthy profit based on your experience. Perhaps you already have a customer base who is willing to make an investment to have access to quality beef or find speculators on the global market who believe grass-fed beef will be more expensive next year. Then you convert the proceeds from your crowdfunding to buy a calf, and tag her with a 1BetsytheCow QR scan code.
A few years later it’s time for Betsy to get auctioned off so you create a sell offer using Master Protocol from the 1BetsytheCow address. The folks at PETA decide they want to save Betsy from the slaughterhouse and make a premium offer using the Master Protocol; you accept the offer using Master Protocol and Betsy is freed to graze the Australian Outback. You had some extra costs taking care of Betsy, account for that, and the remainder is paid out to Betsy coinholders as a dividend payment using Master Protocol.
Case 2: Collections
People love collecting stuff and the best things to collect usually come with a limited supply. There is a natural industry here for coinication.
As new generations get more used to spending time online we need a way to verify the authenticity of digital items without a central authority that could go out of business.
So another use case of smart property are items like Magic the Gathering cards, baseball cards, Marvel Universe cards, and so on. Now without getting into a philosophical discussion of copyright laws, most people can agree that no one would want to trade a real Magic the Gathering card for a photocopied card (all else being equal).
So just like with Betsy, Marvel Comics or Wizards of the Coast, can create a smart property for specific cards. Any game developer can then integrate with the Bitcoin and Mastercoin Protocols to verify ownership of tokens representing specific cards. Those cards can then be traded using the Master Protocol Distributed Exchange. Take this one step further and any set of game items, not just trading cards, could reside on a blockchain as smart properties.
The concept of coinication can be extended into may other realms particularly in the world of art where provenance can sometimes be lost, and being able to have a perpetual record of ownership transmission would bring additional value to the authenticity of an item.
Case 3: Internet Applications
Likely one of the most immediate and compelling use case for smart properties is internet-based applications. Back during the turn of the millennium Marc Andreessen had started a company by the name of LoudCloud the first company to offer what became an entire industry of “cloud computing”. Had Bitcoin and Master Protocol been around at the time how may have Marc used it to his advantage?
- released a smart property to fund capital expenses offering some percentage profit share
- create a GigahertzCoin (GHz) that was equal to 60 billion cpu cycles – 1 minute of 1 GHz processor
- sold GHz on the Distributed Exchange for some other token like bitcoin or mastercoin
- allowed users to trade in their GHz for 1 minute of processing on a 1 Ghz CPU
The use case is a bit more complex than this but for the sake of simplicity one can imagine a process that looks something like this:
If you want to further develop this use case head over to Reddit for a discuss and a link to the google drawing.
By no means are there cases for coinication limited to these. We have even been approached by investment bankers who are contemplating how to use Bitcoin to coinify illiquid assets such as existing and start up companies and real estate thus providing investment opportunities usually only accessible to select portions of the world’s population. So the possibilities are unlimited and require a combination of creativity, market acceptance and further development of Bitcoin and Master Protocol.