How colored coins work on the Blockchain

In a few words, I would say, colored coins is a progressive application of bitcoin’s blockchain. This protocol is thought to have properties of Bitcoin 2.0, as it increased the use of bitcoin’s blockchain. These coins are tokens that are colored to represent real assets. Colored coins are proof any material like cars, house etc., and they are easy to issue too. There aren’t so many colored coins, but the one that are available have some very interesting features.

Colored coins are commonly used by the companies that want to host an Initial Public Offering (IPO). It is very simple and time-saving to set up an IPO with colored coins and at a very low cost. Coinprism which is a colored coin wallet lets organizations create an IPO and issue shares within a matter of minutes. Later the shares can be exchanged easily through blockchain anywhere in the world.

The procedure of creating, using, and storing colored coins needs to be simplified for mainstream adoption, as they are going to be more important for bitcoin’s future. Though, the colored coin protocol is too young and it also has time to simply itself.

Colored coins is a simple way to issue as well as transfer assets on bitcoin blockchain. They can be used to represent smart properties, stocks, bonds, and precious metals etc. They allow you to create smart properties. Your house can be represented on the blockchain as a colored coin. The person who owns the coin will be the legal owner of the house.

Colored coins increasing the abilities of the blockchain

The main benefit of the colored coin is that it always remains on the blockchain, therefore, secured by the huge investment in the hardware that maintains the network. You can create as much coins as you want and they don’t need their individual network or any kind of dedicated hardware, no matter whether its 1 or 1 million coins, they are supported by the same network.

According to the experts, colored coins have a long way to go, but there are already so many possible uses of these. With the increasing number of colored coin wallets, the ease of using the coins will also increase. It is likely that the wallets that are non-color aware ruin colored coins by spending them. As the protocol expands itself, there will be very little chances that the user will destroy assets accidentally.

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