<p>From our <a href="http://wiki.mastercoin.org/index.php/FAQ#Where_does_Mastercoin_derive_its_value_from.3F_Why_is_it_valuable.3F" rel="nofollow">FAQ</a></p>

<blockquote>
  <p>The initial value for mastercoins came out of the fundraiser
  "anchoring". People were willing to "sacrifice" 1 BTC in exchange for
  about 100 MSC, so it anchored the initial value of MSC in at least
  0.01 BTC per MSC.</p>
  
  <p>The more general answer is that Mastercoin provides a set of features
  that only work with MSC or Mastercoin-based currencies, and there is a
  limited number of them. So, in order to enjoy these features, you have
  to own some mastercoins, giving them an independent value. The more
  real world usage Mastercoin sees, the higher the value of each
  mastercoin. In addition, as always, a lot of its value is currently
  driven by speculators executing a price discovery process.</p>
  
  <p>Specifically, mastercoin tokens are used for:</p>
  
  <p>Creating derived currencies and smart property are used to create
  and/or promote smart property tokens as an anti-spam measure.
  Mastercoins are used as the liquidity layer for Contracts for
  Difference The distributed exchange between Mastercoins and user
  generated currencies is more efficient than BTC&lt;->MSC or BTC&lt;->Derived
  exchanges - the latter require a 2 step commit process. As the
  protocol evolves, more direct usages for Mastercoins may be created.</p>
</blockquote>

<p>I added this last bit about token usages to the FAQ following your questions - thanks ThePiachu for this questions!</p>

CC BY-SA 3.0
2014-03-15T17:18:31.913Z
So how are they used for the smart property tokens? Are they converted like colored coins into those tokens, destroyed to create them, or perhaps a fee is paid that someone else can earn?
ThePiachu
CC BY-SA 3.0
2014-03-16T14:09:49.593Z
I believe the currently agreed on mechanism is that anybody can create SP tokens without paying/destroying anything, but MSC can be destroyed to promote your SP. We will have a SP directory where the top promoted assets appear first. This is still work in progress and can change - I'll ask J.R to chime in here as well.
ripper234
CC BY-SA 3.0
2014-03-17T17:05:36.870Z
What Ron said, plus once you've issued a Smart Property, you need MSC to buy and sell that property on the distributed exchange.
dacoinminster
CC BY-SA 3.0
2014-03-15T15:28:54.710Z
2014-03-15T15:28:54.710Z
ripper234
<p>What are mastercoins used for in the Mastercoin system?</p>

<p>In Bitcoin, bitcoins are the only store of value and are spent as fees that the miners earn. In Ripple, ripples are used as a meta-currency accepted by everyone and are spent as fees that decrease the supply of ripples.</p>

<p>Does Mastercoin use any of those models? Are mastercoins the primary store of value in the Mastercoin system, or can one use bitcoins? Are they used for paying fees? If so, is anyone earning the fees and how?</p>

CC BY-SA 3.0
2014-03-14T02:58:46.597Z
What do you mean by "spent as fees"? The value isn't implicitly in the fees.
John T
CC BY-SA 3.0
2014-03-14T03:32:36.317Z
@JacobTorba It means that one spends bitcoins in the system to process transactions. Similarly in Ripple one needs to use/destroy XRPs, even when dealing in IOUs.
ThePiachu
CC BY-SA 3.0
2014-03-15T13:56:29.780Z
You created the new tag "utility" for this question. Does it have a specific meaning in this context? Otherwise it might be a meta-tag and should be removed.
Murch
CC BY-SA 3.0
2014-03-15T17:15:51.377Z
@Murch I guess in this context it means whether the coins are useful in some way, whether they have a utility value, or are they valuable only because of scarcity and other factors that don't correlate to a function they are serving.
ThePiachu
<transaction-fees><omni>
What are mastercoins used for in Mastercoin?
ThePiachu
# What are mastercoins used for in Mastercoin?

(Asked by: username_0 on 2014-03-14)

What are mastercoins used for in the Mastercoin system?

In Bitcoin, bitcoins are the only store of value and are spent as fees that the miners earn. In Ripple, ripples are used as a meta-currency accepted by everyone and are spent as fees that decrease the supply of ripples.

Does Mastercoin use any of those models? Are mastercoins the primary store of value in the Mastercoin system, or can one use bitcoins? Are they used for paying fees? If so, is anyone earning the fees and how?

**Tags:** transaction-fees, omni

> **Comments:**
> **username_1**: What do you mean by "spent as fees"? The value isn't implicitly in the fees.  
> **username_0**: @JacobTorba It means that one spends bitcoins in the system to process transactions. Similarly in Ripple one needs to use/destroy XRPs, even when dealing in IOUs.  
> **username_2**: You created the new tag "utility" for this question. Does it have a specific meaning in this context? Otherwise it might be a meta-tag and should be removed.  
> **username_0**: @username_2 I guess in this context it means whether the coins are useful in some way, whether they have a utility value, or are they valuable only because of scarcity and other factors that don't correlate to a function they are serving.  

---

## 1 answers

### Answer by username_3 on 2014-03-15. Score: 3

From our [FAQ](http://wiki.mastercoin.org/index.php/FAQ#Where_does_Mastercoin_derive_its_value_from.3F_Why_is_it_valuable.3F)

> The initial value for mastercoins came out of the fundraiser
> "anchoring". People were willing to "sacrifice" 1 BTC in exchange for
> about 100 MSC, so it anchored the initial value of MSC in at least
> 0.01 BTC per MSC.
>
> The more general answer is that Mastercoin provides a set of features
> that only work with MSC or Mastercoin-based currencies, and there is a
> limited number of them. So, in order to enjoy these features, you have
> to own some mastercoins, giving them an independent value. The more
> real world usage Mastercoin sees, the higher the value of each
> mastercoin. In addition, as always, a lot of its value is currently
> driven by speculators executing a price discovery process.
>
> Specifically, mastercoin tokens are used for:
>
> Creating derived currencies and smart property are used to create
> and/or promote smart property tokens as an anti-spam measure.
> Mastercoins are used as the liquidity layer for Contracts for
> Difference The distributed exchange between Mastercoins and user
> generated currencies is more efficient than BTC<->MSC or BTC<->Derived
> exchanges - the latter require a 2 step commit process. As the
> protocol evolves, more direct usages for Mastercoins may be created.

I added this last bit about token usages to the FAQ following your questions - thanks username_0 for this questions!

> **Comments:**
> **username_0**: So how are they used for the smart property tokens? Are they converted like colored coins into those tokens, destroyed to create them, or perhaps a fee is paid that someone else can earn?  
> **username_3**: I believe the currently agreed on mechanism is that anybody can create SP tokens without paying/destroying anything, but MSC can be destroyed to promote your SP. We will have a SP directory where the top promoted assets appear first. This is still work in progress and can change - I'll ask J.R to chime in here as well.  
> **username_4**: What Ron said, plus once you've issued a Smart Property, you need MSC to buy and sell that property on the distributed exchange.  

---

