What value does one place on this 'mastercoin' gold. We know the value of bitcoin is based on the energy and resources to extract a bitcoin. How much did it cost to extract this Mastercoin gold?
The value of bitcoin is derived far more from its protocol and network effects than its mining and scarcity - ie the ability to utilise a global payment network that allows quick, almost free, trustless transactions. Do you really think bitcoin has a market cap of billions just because it is mined??
Consequently, the fact that MSC is not mined is not a crucial point. It is a protocol that allows a number of very useful financial operations that bitcoin doesn't. Since it utilises the bitcoin network, MSC derives value from bitcoin's security as well.
Also, what is the utility of this mastercoin gold? if one master coin can contain the same number of user defined coins as 100 master coins, then what is it worth?
Surely the number of coins is irrelevant? It is their value that matters. User defined coins may derive their value from real world assets but the only way they can hold this value if they are backed by MSC of the same value. You can't just magically create value with a smart asset. It has to be backed by something and it shouldn't require explaining that in the virtual world it is impossible to back the smart asset with the real world asset it is derived from. This is how the protocol creates demand for the tokens it uses. This is how MSC have value.
The bottom line is that crypto currencies are protocols before they are currencies and it is in the protocol that the value lies.