What are colored coins?

Colored coins are… A colored coin is a cryptoasset that’s been repurposed to represent something of value by adding extra information to it, called metadata. Now that we have explained what colored coins are, to provide some additional context and explain how colored coins crypto transactions work, below is a brief overview of how coloring happens.

What is a colored bitcoin?

Yoni Assia, the CEO of eToro, was the first to suggest Colored coins in an article published on March 27, 2012. In the article titled bitcoin 2.X (aka Colored bitcoin), Assia claimed that the initial specifications that bitcoins transmitted using the "Genesis Transaction" protocol are recognizable, distinctive, and trackable on the ledger.

What is the colored coin protocol?

In 2013, Flavien Charlon, the CEO of Coinprism, developed a Colored Coin Protocol that permitted the generation of colored currencies by employing specified settings in transaction inputs and outputs. This was Bitcoin's first working Colored Coin Protocol.

Can colored coins be transferred?

This made colored coins a reality, and it is no possible to add information such as “This represents one ounce of gold” or “This is an IOU for $500 owed to Rob Turner of Miami, Florida”. These colored coins can be transferred and the owner of the coin is also the owner of the asset represented by the coin.