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Mastercoin is based on Bitcoin, and has a very similar security model. However various parameters make the security different (some better, some maybe worse).

How exactly do they differ, security wise?

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Mastercoin Founder here.

Mastercoin inherits its security model from bitcoin, with some minor changes. To undo a Mastercoin transaction, you'd have to undo the bitcoin transactions containing the Mastercoin transaction data, so we have almost as much security as bitcoin itself. I say "almost" because the order of Mastercoin transactions in a bitcoin block matters, and a block-chain reorg can affect that ordering, because bitcoin miners don't pre-validate mastercoin transactions before including them in a block (bitcoin transactions must be valid before they will be included by a miner). Consequently, in the event of a blockchain reordering event, a Mastercoin transaction which was previously invalid can become valid due to reordering.

The end result is that a Mastercoin transaction with 3 confirmations is less secure than a bitcoin transaction with 3 confirmations, but more secure than a bitcoin transaction with 2 confirmations. I typically say that Mastercoin transactions are "half a confirmation less secure" than bitcoin transactions against double-spend attacks.

In the future, Mastercoin will be MORE secure than bitcoin - specifically against theft and loss. Mastercoin features include the ability to put restrictions on a "savings" address such as temporary reversibility and spending limits. These limits directly prevent theft, and indirectly prevent loss (since it is safer to have more backups of a wallet which can't be stolen).

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How exactly do they differ, security wise?

Who knows really.

There's no guidelines, no proper protocol specifications, no sample code. Depending on the implementation you can have 4 different recommended services showing multiple conflicting balances for an address, which is clearly a risk if anybody wanted to use the terrible system for anything serious. Even the creator "dacoinminister" seems to have very little except for a vague notion of how things will work, and just dismisses questions like this with hand-waving and "it'll work itself out".

In short, nobody can tell if you if it is "secure", because "it" really doesn't have a definition. Nobody asks about security because it's dump-and-dump amateur hour.

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Mastercoin isn't based on bitcoin in the same sense that other alt-coins are based on bitcoin. Mastercoin adds smart contracts/property to the original Bitcoin blockchain. Mastercoin doesn't introduce its own blockchain. And thus Mastercoin is no simple fork with different parameters (like so many other alt-coins).

Because Mastercoin lives within the blockchain of Bitcoin it can't really add any extra security. A compromised bitcoin is a compromised master coin.

The extra rules which Mastercoin implements can be viewed as extra security. But these are rules which could also be implemented in Bitcoin itself. And its the question if that actually works.

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