Before Vitalik Buterin worked on Ethereum, he was involved in a project also known as Colored Coins. These were by redris. Colored Coins - The original NFT collection. @thecoloredcoins. The original NFT. Own a Colored Coin on the Cardano blockchain as a non-fungible token. Colored Coins: Bitcoin, Blockchain, and Land Administration. Written By: Aanchal Anand, Matthew McKibbin, and Frank Pichel Paper prepared for presentation. BETTER PLACE SAINT ANSONIA AUDIO EXPRESS

For transactions with only one input and one output, it is easy to determine that the color of the output coins is the same color that was received by the input address, since a Bitcoin address can only handle a single color value. However, in transactions with multiple inputs and outputs, determining which colored coins of inputs correspond to which outputs become a more complex task. For that, there are several algorithms that propose to solve this problem, each one with its peculiarities.

An intuitive way to understand this algorithm is to consider that the transaction has a width proportional to its total input amount. On the left side there are inputs, each a width proportional to its value, on the right side there are outputs with values proportional to their bitcoin values. Assume, then, that colored water flows in a straight line from left to right.

The color of an outlet will be the color of the water arriving at it, or colorless if multiple-color coins arrive at that outlet. A single Bitcoin address cannot handle coins of different colors. In essence, the algorithm has the same principle as the OBC, however, treating each output as containing a pad of a certain number of colorless bitcoins, with the colored coins following them. The ideas surrounding the metaverse have evolved ever since.

Economic governance and metaverse commerce are two of its key aspects since this virtual world has its own economy and currencies with which users may trade any object. Metaverses may incorporate all accessible NFT applications; hence, their ecosystems may include play-to-earn games and markets to exchange assets or virtual properties e. As a result, they are one-of-a-kind and non-fungible. This inherent feature enables NFTs to prove the authenticity and ownership of various types of items in various fields, which explains its rapid expansion in digital collectibles e.

The key feature of these games is that users are primarily rewarded with two types of in-game assets including NFTs with variable scarcity e. Through an application, the company could configure a control message that would send a message signed by the private key that currently has the colored coin. In this way, its users could transfer the vehicle's digital key to each other, by transferring the currency. This protocol feature may be used in land management by indicating ownership of a piece of land with a single or several tokens.

The token's information may be used to maintain public registry parameters such as size, GPS locations, year created, and so on. The land administrator may encrypt ownership details such as titles or identification so that only individuals with the right private key can see the information.

Anyone with an internet connection can publicly verify and trace the ownership of each token using block explorer software. In such cases, the blockchain may assist in keeping track of a company's ownership structure as well as creating and distributing DCO shares in a transparent and safe manner.

Issue of coupons: A company can issue promotional coupons or loyalty points among its customers in the form of colored coins. Digital collectibles: Decentralized management of digital resources. Similar to how collectors acquire and sell paintings, colored coins enable managing digital resources in a similar way, such as e-books, music, digital games and software, guaranteeing ownership of the resource to the owner of the coin.

As long as the provider's identity is protected by the legal framework, colored coins may be used to transfer any digitally transferable right. The circulation is based on a cryptographic signature. The contract and any payments linked to it are recorded on the blockchain using a unique cryptographic key that identifies the rightful owner of the currency. Parties may use an alias to sign up for the protocol under legally permissible circumstances. In reality, the secret cryptographic key enables the system to validate subscribers' digital identities without disclosing any personal information.

Users may trade and manage all asset classes in a somewhat decentralized framework with a minute amount of colored Bitcoin, according to marketing literature, rather than needing to send hundreds or even thousands of bitcoins in return for an item or service. Bonds: A special case of a deterministic contract, bonds can be issued with a down payment amount and an installment schedule in bitcoin, another currency or commodity.

Decentralized digital representation of physical resources: It means tying physical resources, such as physical objects, commodities, or traditional currencies, to digital resources and proving ownership of those objects in that way.

NFT tokens use this approach, selling ownership of artworks and even living properties. Wallets are used to manage the addresses associated with each pair of keys public and private of a Bitcoin user, as well as the transactions associated with their set of addresses.

Rather than dealing with cryptocurrencies, colored coin wallets add a layer of abstraction, managing digital assets, such as stocks, altcoins , which are created on the Blockchain, intellectual property and other resources. While bitcoin wallets are required to use a unique Bitcoin address for each transaction, colored coin wallets frequently reuse their addresses in order to re-issue coins of the same color.

To issue colored coins, colored addresses must be generated and stored in colored wallets administered by a color-aware client such as Coinprism. There is, however, some concern about the interoperability of the existing implementations, owing to the fact that colored coins transactions are operationalized using the variety of different algorithms. Transactions between unsupported wallets may result in the loss of currency coloring features.

In June , a Torrent-based version of Colored Coins was developed to cover the protocol's use while Bitcoin has not yet been widely adopted by the market. Making the protocol compatible amongst different Bitcoin implementations is one approach to increase the usage of Bitcoin for digital asset management. Colored coins and other virtual currency are presently not recognized as evidence of ownership by any government agency in the United States. For financial institutions, the lack of an identifiable identity across on-and off-chain settings is still a barrier.

Due to the fact that the rights to receive notifications, vote, receive dividends, and exercise appraisal rights are restricted to registered owners, establishing ownership is likely even more critical for blockchain stock.

They can represent something external, in the actual world, such as a corporate action or debt repayment obligation. This suggests that they are issued by a person or entity, which carries some level of risk. That the issuer does not comply with its related obligations or there may even be fraud and that those currencies may not represent anything actual.

It is impossible to store the semantics of information indicating what a token represents. For instance, the blockchain can record the number of concert tickets that have been issued and the addresses of their owners, but it cannot encode the fact that they represent allowed access to a specific concert at a specific time.

Colored Coins are made of small bitcoin denominations that can be as small as a single satoshi, the smallest unit of a bitcoin. Colored Coins allowed further research and opened the way for NFTs. The enormous potential of putting physical assets onto distributed ledgers was obvious, but deployment requested a more flexible blockchain.

Many people became aware of the tremendous growth for granting assets onto blockchains also as a core component of Colored Coins. Counterparty enabled asset creation, as well as a decentralized exchange and a crypto token with ticker XCP. It had several work and assets, like trading card play and meme trading.

ETHEREAL CRYSTALS REIKI

This was Bitcoin's first working Colored Coin Protocol. This protocol, also known as the Open Assets Protocol, is open source and may be integrated into existing systems by anyone. Colored coins were the original notion for representing assets on the blockchain. For example, for the Bitcoin blockchain, each Satoshi the lowest potential value of Bitcoin might represent a separate item. This notion is mostly used to monitor ownership of tokens and, by extension, assets.

There is promise in using colored coins as an effective way of tracing in production situations since the transactions can be merged or divided into new transactions and the color can be readily altered after each transaction. Finally, current tools, like as blockchain explorers, make it simple to view and analyze transactions. Colored coins are transferrable in what is known as atomic transactions. Atomic transactions are transactions that permit the direct peer-to-peer exchange of one token for another in a single transaction.

Despite being created to be a protocol for monetary transactions, one of the Bitcoin's advantages is a secure transaction protocol not controlled by a central authority. This is possible through the use of Blockchain, which maintains track of all Bitcoin transactions worldwide. A transaction consists of: A set of inputs such that each input has a a Transaction Hash and Output Index of a previous transaction carried out on that bitcoin and b a digital signature that serves as cryptographic proof that that input address authorizes the transaction.

An output set such that each output has a the bitcoin value to be transferred to that output and b a script that maps a single address to that output. The output of this transaction currency belongs to the initial owner recorded in the system in a case of a jewelry store associating its jewelry with digital resources, the newly colored coins will belong to the store.

When the resource is transferred or sold, the currency that belongs to the previous owner is consumed, while a new colored currency is created at the outgoing address of the transfer transaction. When it is necessary to identify the owner of a coin, it is enough to evaluate the transaction history of that coin from its genesis transaction to the last transaction with unconsumed output.

The Bitcoin blockchain has tracking of the public keys associated with each address, such that the owner of the coin can prove ownership by sending a message with the private key associated with that address. The EPOBC algorithm colors the coins by inserting a mark in the nSequence field of the first input of the transaction. It is important to note that the nSequence field is always present in Bitcoin transactions, but it is not used, so it does not generate an overhead for the coloring process.

In general, there are two cases to consider about genesis transactions: [22] Non-reissueable colors In this case, the transaction inputs are irrelevant to the algorithm, since once the transaction is executed, the coin issuer has no power over them. So all that matters is the genesis transaction itself. In a second moment, the issuer will be able to issue new units of that color through genesis transactions with the same secure address. It is important to note that an address can only be associated with a single color.

Once an address emits a reissueable color, it will no longer be able to participate in coloring coins of other colors, not even non-reissueable colors. It is also possible to transfer coins of mulctiple colors in a single transfer transaction. Tagging-based coloring is the most well-known algorithm for this operation. If colored coins are used as input for transactions that do not follow the transfer protocol, the value associated with their color is lost. Furthermore, their value can also be lost in a malformed transaction.

Inputs do not need to be of the same color, e. For transactions with only one input and one output, it is easy to determine that the color of the output coins is the same color that was received by the input address, since a Bitcoin address can only handle a single color value. However, in transactions with multiple inputs and outputs, determining which colored coins of inputs correspond to which outputs become a more complex task.

For that, there are several algorithms that propose to solve this problem, each one with its peculiarities. An intuitive way to understand this algorithm is to consider that the transaction has a width proportional to its total input amount. On the left side there are inputs, each a width proportional to its value, on the right side there are outputs with values proportional to their bitcoin values.

Assume, then, that colored water flows in a straight line from left to right. The color of an outlet will be the color of the water arriving at it, or colorless if multiple-color coins arrive at that outlet.

A single Bitcoin address cannot handle coins of different colors. In essence, the algorithm has the same principle as the OBC, however, treating each output as containing a pad of a certain number of colorless bitcoins, with the colored coins following them. The ideas surrounding the metaverse have evolved ever since.

Economic governance and metaverse commerce are two of its key aspects since this virtual world has its own economy and currencies with which users may trade any object. Metaverses may incorporate all accessible NFT applications; hence, their ecosystems may include play-to-earn games and markets to exchange assets or virtual properties e.

As a result, they are one-of-a-kind and non-fungible. This inherent feature enables NFTs to prove the authenticity and ownership of various types of items in various fields, which explains its rapid expansion in digital collectibles e.

The key feature of these games is that users are primarily rewarded with two types of in-game assets including NFTs with variable scarcity e. Through an application, the company could configure a control message that would send a message signed by the private key that currently has the colored coin. In this way, its users could transfer the vehicle's digital key to each other, by transferring the currency.

This protocol feature may be used in land management by indicating ownership of a piece of land with a single or several tokens. The token's information may be used to maintain public registry parameters such as size, GPS locations, year created, and so on. The land administrator may encrypt ownership details such as titles or identification so that only individuals with the right private key can see the information. Anyone with an internet connection can publicly verify and trace the ownership of each token using block explorer software.

However, the transactions could be processed on the blockchain. Assia and Buterin saw this process of coloring coins as a way of facilitating non-monetary transactions. To put it another way, colored Bitcoin coins can be used to signify ownership and transference of things other than money, such as shares in a company, tokens in a game, or contracts. How colored coins work Within the term colored coin, the word color is being used to describe the process of making something distinct.

An identifiable distinct element is coded into the metadata of a coin, and thats what makes it colored. Colored coins are A colored coin is a cryptoasset thats 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.

Step 1: the genesis transaction A genesis block must be generated to release the colored coins. Therefore, after the metadata has been created, its added to the first original block in a chain. This is the genesis block, and the initial transaction is known as the genesis transaction. This sets the rules for all future transactions. One technical point to note is that a new output has to be created to ensure that the extra data from a colored coin doesnt slow down the network. Therefore, all of the metadata defining a colored coin cant be over 40 bytes.

This allows colored coins to remain as standard transactions and not disrupt the network as a whole. Step 2: transfer transaction Once blockchain colored coins have been created, they need to be sent. This is where a transfer transaction comes in. Basically, you need the ability to send a colored coin from one colored coin wallet to another. Both addresses must recognise the coin, so the input and output data need to sync up.

This is where coloring algorithms come into play. Step 3: coloring algorithms Coloring algorithms are the mechanisms that allow transactions to take place according to a set of predefined rules. These mechanisms provide structure to the transactions and tell the sender and receiver of the color coin wallet the following things: The color balance of the network i.

This allows colored coin transactions to happen smoothly, securely and without a central point of control. Whats more, the algorithms ensure colored coins are non-fungible, so they cant be changed. How do colored coins expand the potential of the blockchain?

Blockchain colored coins make it possible to send something other than money in a decentralised way. Although Bitcoin was the original focus for colored coins, other blockchains have adopted the concept in recent years. The most prominent example is Ethereum.

Colored Ethereum tokens can be used to signify real-world assets such as proof that you own a property or virtual tokens in a game. In turn, the holder of said coins has irrefutable proof that they own the asset. For those interested in NFTs , you can see how colored coins have formed the basis of non-fungible tokens. Before we look at the colored coins vs NFTs debate, below are some potential uses of the colored coins. Smart property Colored coins have the ability to authorise the use of smart property.

Assia theorised that a rental company could assign colored coins to cars. Each coin could only be activated by a unique private key, and this key could be contained within a message sent to the renters smartphone. The key would send a signal from the phone to the car and unlock it, thus, creating a situation where only the person renting the car could use it. Company shares, contracts and bonds A company could issue shares as colored coins.

This would not only allow them to be traded, but show irrefutable proof of ownership. You can do the same with contracts and bonds. Demand deposits Colored coins could be used to represent deposits. People could trade Bitcoin colored coins or Litecoin tokens and have a record of their deposit.

Emergent currencies A new currency could emerge from colored coins. The coin could exist on the Bitcoin blockchain, but have a separate value and characteristics than BTC. The colored coins vs NFT debate can be complex and nuanced, but there are a few basic points that can help provide some background on the subject.

The concept of adding non-fungible assets to a blockchain originated in Yoni and Buterins paper. The idea that you can add an overlay open asset to a blockchain to create a subset of unchangeable tokens is the theory behind colored coins. NFTs are an evolution of this concept.

Colored coins crypto btc 2022 second semester paper

BLOCKCHAIN BUSINESS USE CASES - Key blockchain applications (colored coins, digital collectibles)

There are many interesting applications to colored coin.

Colored coins crypto	Making a Bitcoin transaction can be as simple as sending an SMS or email, transferring coins crypto directly in a peer-to-peer fashion, without the need for any third party intermediary. Alt coins continued to proliferate in andeither based on bitcoin or on Litecoin. Bitcoinxa community wanting to "democratize finance," is hoping to facilitate just that, with a concept called "colored coins". The contract and any payments linked to it are recorded on the blockchain using a unique cryptographic key that identifies the rightful owner of the currency. Building a colored coins technology that is binary-compatible with Bitcoin will be problematic, he asserts, because colored what he describes colored coins crypto high transaction fees. Lenders and title companies can place funds into trustless escrow accounts only to be transferred if payment is received or the proper signatures are presented. In fact, clients are already available.
Cryptocurrencies news 2018	Somewhat crypto a certificate of deposit CDparticipants can reserve a portion of their currency holdings, while earning an investment return https://registrationcode1xbet.website/betting-odds-on-super-bowl/4519-forex-broker-inc-account-types.php the form of new currency issued as interest payments and transaction fees. Counterparty teamed up with Force of Willa popular trading card game, and launched their cards on the Counterparty platform. Much depends on whether we're talking about native support at the protocol level, or add-on, "floating" support in bitcoin clients. The confirmation is required for the new owners of the blocks transactions to access their digital tokens sent to them in the previous block of transactions. Peercoin Peercoin was introduced in August and is the first alt coin to use a hybrid proof-of-work and proof-of-stake algorithm to issue new currency. Land administration records if stored or backed up on a decentralized storage system are protected against fraud, and allow for disaster recovery. Additionally, it colored coins crypto all of the information security and safety concerns of the host blockchain.
Colored coins crypto	For example, for the Bitcoin blockchain, each Satoshi the lowest potential value of Bitcoin might represent a separate item. How about an IOU? He and his wife Jennifer have established themselves over many colored coins crypto as first-rate digital artists. An intuitive way to understand this algorithm is to consider that the transaction has a width proportional to its total input amount. Now where did this technological phenomenon come from?
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