Here are the differences between the current BitShares system and MasterCoin:

1) BitGold is initially backed by 2x its value in BitShares by someone intentionally taking a short position that will LOSE MONEY if BitGold goes up.
2) The price of BitGold is only ever determined by voluntary market actors, no oracles or data feeds.
3) The highest unaccepted bid is used to perform automatic margin calls for any short position with less than 1.5x backing.
4) BitShare positions actually pay dividends & there is an opportunity cost for being short and a positive ROI benefit for being long.

My original BitShares idea suffered from the same core problem as MasterCoin does today... I was attempting to operate with 0 margin in the event the price moved against the creator of BitGold or GoldCoin.    I also attempted to rely entirely on market expectation that BitGold would track gold on its own based entirely on expectation and new issuers creating BitGold at the new price.   In effect, I started out with all of the mistakes that MasterCoin is repeating.   The difference is that I paid people to find these things and challenge me to fix them.   TheZerg made 10 BTC (when it was worth $1300) and forced me to innovate and come up with the current version of BitShares.

Last I heard from TheZerg he said the new BitShares system is much harder to find fault with.    That said, I am still willing to pay a 1 BTC bounty to anyone who can find a fault with the BitShares protocol that will result in me making a change and 10 BTC to anyone who can convince me to abandon BitShares all together.   Note: Charles & I are the sole judge of whether or not to award the 10 BTC bounty, but we have a history of being fair/honest in our judgements.  If you can convince us of fundamental problems you will save us money and we would gladly pay 10 BTC... if you cannot convince us then we will be rolling out BitShares as the proof of your failure to convince us.  

MasterCoin seems unwilling to risk 10 BTC on the potential that the flaws in his system might be discovered.  If he is so confident his approach will work then it is a 0 risk proposition to offer a 10 BTC bounty.   At the very least his investors will know that he has put up enough money to insure his ideas are properly vetted.