Does it work?
Yes.
Okay, so some guy runs an experiment with Mastecoin, then realizes that there is not correlation between the bitcoin being used to transfer and the MSC actually transferred.
Why do you think there should be a correlation? Amount of mastercoins being transferred is encoded in a different way. Bitcoin amounts are irrelevant.
Rather you folks want to claim that I don't get it, but never really address the issue.
The specification defines how amounts are encoded. How else this issue can be addressed?
So where is the scarcity here? If MSC has no scarcity built in, then where is the value? Simple economics.
Amount of mastercoins in existence is fixed, it was possible to create new mastercoins by sending to exodus address only in August of 2013. No new mastercoins will be created. (Some amount of mastercoins will be released to foundation over time, but we can assume that they were already created.)
The flaw is obvious and in plain sight. If you can not see it then I'm sorry.
There is no correlation with the underlying bitcoin! In otherwords, it is just as good as sending an encrypted message, no difference!
The protocols have to be designed so there is a economic correlation to actions, without it, then there is no scarcity and no value.
Like I said, bordering on utter insanity.
I rest my case.