MasterCoin to create new altcurrencies in Bitcoin's block chain

Bitcoin expert J. R. Willet is looking to transform not just Bitcoin, but the cryptocurrency world.

In his view, Bitcoin is incomplete, and has led to the creation of altcoins which he says has diluted the message of Bitcoin.

That protocol layer will allow for a plethora of new digital currencies to be created that will all exist on the Bitcoin block chain.

In other words, currencies created on top of MasterCoin will use the Bitcoin block chain.

In the specification that Willet published online, he describes altcurrencies as: "Alternate block chains compete with bitcoins financially, confuse our message to the world, and dilute our efforts. These barriers interfere with the adoption momentum of bitcoin and the adoption momentum of alternate currencies as well, regardless of how well-conceived their rules may be."

With savings addresses, MasterCoin has the ability to reverse transactions - whereas ordinary transactions from "Spending wallets" are irreversible just as with the basic Bitcoin protocol.

Willet has created something called the "Exodus Address", which is a bitcoin wallet that will serve the same purpose to the MasterCoin protocol as the genesis block did to the Bitcoin block chain.

Not only is the Exodus Address a marker on the Bitcoin block chain, but Willet is also using it as a way to fund his efforts.

Some on the Bitcoin forum have questioned the validity of MasterCoin.

For MasterCoin to succeed in bringing focus back to the bitcoin movement, it would have to cause altcoins to fall out of use in favour of MasterCoin derived currencies.