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Mastercoin was an attempt to implement a new cryptocurrency with richer abilities on top of Bitcoin. Vitalik got interested in that, but he saw its limitations. So he made a proposal Ultimate Scripting: A Platform for Generalized Financial Contracts on Mastercoin. This is essentially a precursor for Ethereum, you can see many similarities. https://web.archive.org/web/20150527194453/http://vbuterin.com/ultimatescripting.html