I'm sorry to disappear for 3 days and then dredge this up, but I can see that you and I have a difference of opinion on the time frame here, and on the idea of the value of the "black swan" events in a commodity speculator's portfolio. But even if you continue with these attempts at a trustless representational currency, let me very respectfully ask you to also include the ability for people to create their own (trust-required) exchangeable entities, with a reference to a signed legal document describing the entity in its genesis block. These new "currencies" could be a mortgage, stock in a company, a commodity with real backing, etc. That is, add "native" support for colored coins within your system. Whether or not your trustless representational currencies work, these trust-backed currencies will be very valuable, will utilize most of the same software infrastructure as your trustless and would make MasterCoin still useful if your trust-backed currency system does not work. PM me if you need some impl help maybe I can find some time...
That's a very interesting idea. I suppose we might as well support currencies that work like colored coins. It doesn't really add any complexity to the design, and it seems likely that people would use it.
That would also give people one way to "invest" in the success of coins which work like colored coins - by buying MasterCoins. Previously there was no way to do this.
The built in decentralized exchange between MasterCoins and the other backed currencies would support something like this with almost no modifications.
Now, why didn't I think of that??