Do you believe that "Bitcoin" cares about how people use it?Bitcoin scalability is a definite challenge. We should tackle that challenge as early as possible, instead of nicely asking people to only use it in specific ways.Willet is open to discuss better, more efficient ways to encode Mastercoin transactions into the blockchain.gmaxwell, do you belong to the school of thinking that categorizes SatoshiDice as spam?

Please stop! You are creating enormous amounts of nonredeemable UTXO. This kind of usage undermines the scalability of Bitcoin because you are pushing data storage into the UTXO set and not merely into the transaction history. The UTXO set must be rapidly available for validation and can not be pruned unlike the rest of the blockchain. Currently pruning yields 50:1 compression (and improving) of the space required to run a full node. The addition of never-redeemable outputs undermines that.

It bloats the UTXO set, which is bad. MasterCoin transactions should all be spendable or provably prune-able. There are plenty of ways to accomplish that, the easiest of which that works today would be to stuff data into unused public keys of an OP_CHECKMULTISIG transaction.

Or prefix the data output with OP_RETURN, which is guaranteed to be prunable. If the output is never meant to be spent, then it is irresponsible not to do this.