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Could you elaborate on the fundamental distinctions between colored coins and traditional cryptocurrencies? I've heard about colored coins as a means to represent and transact assets on top of a blockchain, but I'm curious about the key differences in their functionality and use cases. Does the colored coin approach require any modifications to the underlying cryptocurrency protocol? How do they compare in terms of scalability, privacy, and interoperability? I'm interested in understanding the technical nuances that set them apart.
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