@Ron Gross
1`. Also, how would lots of stuff on top of bitcoin protocol, like social networking, work without clogging the blockchain which is already over few gigabytes in size?
2. Care to address the issue of dividends? Some make the claim Protoshares pays dividends while Mastercoin doesn't.
3. ProtoShares pay dividends by taking capital from say a "company" who does an IPO. That "company" will lose 20% in profits/pri proceeds paid to Angels and Protoshare owners. A company starts with 80% of the raised capital and or will have to pay 20% of its profits. I assume companies trying to do an IPO using Mastercoin will get access to 100% of the capital and won't be forced to pay anything to Mastercoin owners. Is that correct?
1. The final design of Mastercoin is not settled yet. Peter Todd is joining the Mastercoin Foundation as of Feb 1 to tackle these exact issues. One possibiliy is a merged mined alt chain or some other design. In any case, Bitcoin has the task of supporting a lot more load in the future, and there are some promising directions to changes in Bitcoin to allow this kind of load.
2. These are just two different models. Decentralized Applications / Decentralized Autonamous Communities/Corporatiosn don't have the pay dividends in order to be profitable. In fact, I see the dividend model as inferior ... the decision when and how to pay dividends is rather arbitrary. When the tokens that represent "shares" are valuable and liquid, there is no need IMO for dividends. Mastercoin will enable entities managed on Mastercoin (Smart Property / DA) to send dividends if they want, but that's quite up to the specific application/organization to decide.
3. As noted in #2, while Mastercoin itself doesn't use dividends, companies using Mastercoin to IPO will be able to use the dividends model if they choose.
Our spec contains dividends since version 0.3.5 (November).
Internet bandwith and storage space keeps growing at an exponential rate. I remember the early days when PC which used to have only 20mb of hard drive and dial-up models limited to 9kbps bandwith. Now we have terrabytes of storage available for very low cost in any retail store and cheap fiber link connections. Perhaps a huge blockchain won't be such an issue, though people also consume much more data these days.
What I see happening in the case of Protoshares/Bitshares and their Autonomous Corporations, is that many of their potential clients would opt for the free alternative of Mastercoin, where they won't have this pressure of paying 20% off their IPO/earnings. I mean what incentive would I have as developer to pick them over Mastercoin?
Not many people put price on this, but the branding and name itself is much better in case of Mastercoin, while Protoshares/Bitshares is confusing and they seem to be very tech savvy oriented, which leaves out all the mainstream crowd. They seem to have very smart and creative people behind the project but seem to have a blind spot when it comes to the psychological side of things and that's probably the most important one, if you wanna get your message out there. Not all of the outside world is made of geeks and they really push the envelope of the geeky side. Took me quite some time to even figure out their Angel investment model. It's almost like they've went out of their way to make it complicated. Sure, every geek out there appreciates a mind bending puzzle but it kinda` undermines what they're trying to achieve.
Mastercoin is clearly the best option at this point. Can't wait for the Windows cold wallet to come out. This is one key ingredient that's missing. 
