And this is the problem with Colored Coins. It's far more complicated than Mastercoin. I think most people can figure out how Mastercoin works with escrows controlling the supply of the user currencies.
I think people are seeing my opinions and thinking I prefer Mastercoin because it will make people rich. People are going to get rich from Colored Coin or Bitshares so that doesn't matter much. What matters is that Mastercoin is very easy to understand, elegant, easy to explain. Bitshares is a similar design to Mastercoin and also easy to explain. Colored Coin is something that every time I ask about it I get different explanations for how it's supposed to work. It's abstract to the point that only the developers seem to truly understand how it works and that is one of the reasons why I don't have a lot of faith in it.
Look, again, colored coins is not a concrete product, it is a concept. We now develop a software toolkit which allows one to develop concrete products on top of this concept.
If you take a concrete product, say, a stock market, it might be relatively simple under the hood, i.e. coins represent ownership of shares, and people can trade them. What can be simpler? But, of course, end users won't need to know how it works under the hood, they will just interact with user interface, hopefully it will be simple enough.
However, something like decentralized prediction market requires much more complex machinery.
Anyway, you're comparing apples to oranges. Mastercoin is supposed to be a single protocol, while colored coins is a family of protocols.
What matters is that Mastercoin is very easy to understand, elegant, easy to explain.
This just isn't true. The idea is simple: there is a list of signed messages and all clients interpret them and arrive to the same state if they use same rules.
But if you go a bit deeper, however, it gets murky: what are rules? How are they updated? How are reorganizations handled?
but it's a lot more complicated, and complexity is a bad thing when you're trying to reduce risks and make things secure.
Yes. The thing is, you ignore complexity of Mastercoin protocol just assuming that escrows take care of everything.
On the other hand, the good thing about colored coins is that each color is independent. And thus if there is some sort of a problem with decentralized prediction market, users of other colors will be unaffected: they are completely separate.
The only problem I can see with Colored Coin is that it would have to get it's value from the currency it's running on top of.
Ugh, you still do not understand what colored coins are about. Let's consider a simple example:
Some venue wants to sell concert tickets in form of colored coins. It will issue them (creating a new color) and sell them for Bitcoins. Now, what is value of these tickets? Is it tied to Bitcoin?
Well, no. It is tied to value of concert. Obviously, tickets become worthless after the concert.
So this is what colored coins are about: it is a tool which allows people to issue tokens which can be used to represent anything people want to represent. There is no such thing as "value of colored coins" in general, as each different kind of token has its own value.
There is also a possibility to associate additional properties and rules with these tokens, but currently it is only a theoretic possibility.
Well, this is an old document which just explains the idea on one particular example.
Here's the new specification:
https://github.com/bitcoinx/colored-coin-tools/wiki/colored_coins_introYes, it is quite a bit abstract. That's the whole point: we do not enforce one particular vision.
For the rest of you guys, the relevant bit is below - if you want more detail that's on the coding thread. Masterchest.info will get a code change to reflect this in a day or two.
zzz 
