Browse Definitions :
Definition

colored coin

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

SearchCompliance
  • OPSEC (operations security)

    OPSEC (operations security) is a security and risk management process and strategy that classifies information, then determines ...

  • smart contract

    A smart contract is a decentralized application that executes business logic in response to events.

  • compliance risk

    Compliance risk is an organization's potential exposure to legal penalties, financial forfeiture and material loss, resulting ...

SearchSecurity
  • What is cybersecurity?

    Cybersecurity is the protection of internet-connected systems such as hardware, software and data from cyberthreats.

  • private key

    A private key, also known as a secret key, is a variable in cryptography that is used with an algorithm to encrypt and decrypt ...

  • DOS (disk operating system)

    A DOS, or disk operating system, is an operating system that runs from a disk drive. The term can also refer to a particular ...

SearchHealthIT
SearchDisasterRecovery
  • What is risk mitigation?

    Risk mitigation is a strategy to prepare for and lessen the effects of threats faced by a business.

  • change control

    Change control is a systematic approach to managing all changes made to a product or system.

  • disaster recovery (DR)

    Disaster recovery (DR) is an organization's ability to respond to and recover from an event that affects business operations.

SearchStorage
  • RAID 6

    RAID 6, also known as double-parity RAID, uses two parity stripes on each disk. It allows for two disk failures within the RAID ...

  • RAM (Random Access Memory)

    RAM (Random Access Memory) is the hardware in a computing device where the operating system (OS), application programs and data ...

  • NOR flash memory

    NOR flash memory is one of two types of non-volatile storage technologies.

Close