Browse Definitions :
Definition

colored coin

Contributor(s): Matthew Haughn

A colored coin is a denomination of a cryptocurrency, often Bitcoin, that is repurposed by marking it with metadata. Colored coins are often called metacoins.

Colored coins can be created to repurpose Bitcoin or altcoins (alternatives to Bitcoin) to create digital assets that represent other things of value.

Colored coins began as an improvised creation of Bitcoin miners. Data space in the blockchain had been used to encode various metadata values. This unexpected data created problems in processing, slowing down the network. Bitcoin's team corrected the issue by adding a 40-byte field where data could be stored as a transaction, along with the encrypted ledger of transactions and data about the coin’s creation.

This metadata makes it possible to repurpose the original cryptocurrency, which is typically done to represent something of greater value than the denomination of Bitcoin. This means that a data-based coin in a digital wallet can be used as a backing for a contract or a certificate for redemption. That use benefits from the coin’s security and verifiability of ownership, as well as the convenience of digital transactions. Some examples of things a colored coin may be repurposed to represent include amounts of gold in game currency or shares in a company. They could also be used to create a currency within a currency.

Colored coins are generally kept in special digital wallets. Much like cryptocoins themselves, the color is generally not a real-world quality; the metaphorical coloring is the addition of metadata.

This was last updated in February 2017

Continue Reading About colored coin

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

  • risk assessment

    Risk assessment is the identification of hazards that could negatively impact an organization's ability to conduct business.

  • PCI DSS (Payment Card Industry Data Security Standard)

    The Payment Card Industry Data Security Standard (PCI DSS) is a widely accepted set of policies and procedures intended to ...

  • risk management

    Risk management is the process of identifying, assessing and controlling threats to an organization's capital and earnings.

SearchSecurity

SearchHealthIT

  • telemedicine (telehealth)

    Telemedicine is the remote delivery of healthcare services, such as health assessments or consultations, over the ...

  • Project Nightingale

    Project Nightingale is a controversial partnership between Google and Ascension, the second largest health system in the United ...

  • medical practice management (MPM) software

    Medical practice management (MPM) software is a collection of computerized services used by healthcare professionals and ...

SearchDisasterRecovery

SearchStorage

  • hot plugging

    Hot plugging is the addition of a component to a running computer system without significant interruption to the operation of the...

  • M.2 SSD

    An M.2 SSD is a solid-state drive (SSD) that conforms to a computer industry specification and is used in internally mounted ...

  • kilobyte (KB or Kbyte)

    A kilobyte (KB or Kbyte) is a unit of measurement for computer memory or data storage used by mathematics and computer science ...

Close