These Colored Coins could represent anything: such as stocks, bonds, smart properties, securities, precious metals, commodities, other currencies (such as dollars, pounds or euros), other crypto-currencies, or anything you might think of.
Here are a few Colored Coins use cases:
- Bitstamp (Bitcoin Exchange) could allow you to withdraw your USD into your Bitcoin wallet as "USD-Bitstamp coins". You can use each of those coins as a coin redeemable at Bitstamp for exactly $1 credit.
- Do an IPO or a crowd sale on the Blockchain: any company can create a coin representing a share of their company, and can then send them to anyone with a Bitcoin address. Investors send bitcoins to the company colored coin address, and the company can send them colored coins back. Note that the company can also issue shareholders dividends. See here to do a crowdsale with Coinprism.
- Pre-sell: A company could also decide to pre-sell its product with Colored Coins. The price its Colored Coins are traded would give an idea on how much people are ready to pay for the future product.
- More use cases: see this reddit thread.
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