Colored bitcoins

[akam]

Hi all,

I'm interested in colored bitcoins - anyone have any thoughts?

[Sage]

Here's an Genius idea...

Fund your project by issuing your own currency using colored Bitcoins.

Keep half the currency for yourself.  Distribute the other half to your first fans.  (Publicly disclose this).

Make an album.

Make it only available using your currency.

Your first adopters will get it essentially for free.  Anyone after that will get it at an ever increasing price if it's popular. Creating a scarcity loop.  Which feeds on itself. 

Also key benefits is the good will you develop with your first fans.  And an "insider" feel to the whole campaign.

You didn't have to sell a thing.  Your fans sold it for you.

You benefited because you kept half the coins.  Now that gives you the cash for your next project.

Of course if no demand develops though for your album your currency won't be worth much.  If the album goes viral then your currency will go through the roof.

If you develop a real name for yourself your currency could become very, very valuable to those holding it after your death.

Brilliant on a lot of levels.  You can thank me later

[akam]

Would the idea be that people buy the album with standard currency and are given both the album and bitcoin stock in it's future development?

If the coins are colored in a way that makes them unable to be traded with the rest of the bitcoin-iverse, I'm not sure how benificial that would be to people..

and then there's the technical issues with putting together such a system...is that an easy process or would i need programming experience?

Thanks for the suggestion either way, interesting for sure.

Cheers
Kevin

[Sage]

Would the idea be that people buy the album with standard currency and are given both the album and bitcoin stock in it's future development?

If the coins are colored in a way that makes them unable to be traded with the rest of the bitcoin-iverse, I'm not sure how benificial that would be to people..

and then there's the technical issues with putting together such a system...is that an easy process or would i need programming experience?

Thanks for the suggestion either way, interesting for sure.

Cheers
Kevin

Colored coins technicalities are still getting worked out.  But have a little vision my friend.  They will be worked out.

This will only work if you create scarcity of your currency.  And that only works if you create demand.  The demand can only be created if people want your album, and to get it they gotta get your currency.

...From who?  your early adopters who you gave the currency to for free.

You reward your early fans, and make them "insiders", as well as the all important psychological buy in to the success of your album.  They have buy in, ownership, and financial benefit from the album and your success.

Big wins all around!

Hear me now, believe me later, the first band to do this will see a huge viral success.  Get in on it now, set everything up for when the technology is there (which is very soon).

[Ichthyo]

If the coins are colored in a way that makes them unable to be traded with the rest of the bitcoin-iverse, I'm not sure how benificial that would be to people..

Its rather the other way round. The "colouredness" of a bitcoin amount needs to be kept intact actively, by using it only in colour aware transactions. Recall that a "Bitcoin" as such doesn't exist. What you can spend is always the output from a previous transaction you received. Once you mix a coloured output with any other ordinary output, e.g. by using it in an "vanilla" bitcoin transaction, you have lost the colour; what remains is the ordinary value of that bitcoin amount.

Thus, what's required is to create any kind of setup, scheme, protocol, contract or whatever which associates something special to that colour. It boils down to being able to create a limited amount of a specially marked "kind" of coin and to transact in those without central registration.

Of course the hope is that all the commonly used clients will support colour aware transactions out-of-the-box eventually. But for that to happen we need cunning ideas to make people "want" to do such colour aware transactions.

[Sage]

Currently you can do it with Armory:

See: http://bitcoinx.org/

There is huge potential here.  It's not getting the credit or attention it deserves.  But it will soon enough.

[akam]

I do love the idea of this, will wait for further developments to implement it myself, good luck to all those involved at the minute.

[remotemass]

I suggest 256*256*256 colours   

[Ichthyo]

I suggest 256*256*256 colours   

 

Seriously, "colour" is a theoretical concept here. The number of colours is absolutely unlimited. What is limited indeed is the number of satoshis. If this concept of coloured coins starts taking off, and people start e.g. representing shares of a company by coloured satoshis, this might become a problem.

But I wouldn't be worried too much about such future pains right now. There is the possibility of merged mining, and it is very likely that we'll be using a whole bunch of different blockchains in future, which are interwoven and protect themselves cross wise. This pretty much also solves the block size problem. Simply scaling horizontally.

In such a future scenario, the "bitcoin classic" blockchain would serve as store for values. If Governement really wants, they can create an inflated administration blockchain, which uses all kinds of colours to represent the various governmental and administrative activities.

[killerstorm]

Would the idea be that people buy the album with standard currency and are given both the album and bitcoin stock in it's future development?

There are many ways to use colored coins for thing like that...

1. Sage's idea is to use them as a currency. E.g. let's say you issue 1000 akam-coins. You say that your album will be available for 1 akam-coin. You akam-coins on market (client has a dialog which allows you to sell your currency, it looks similar to btc-e.com and litecoinglobal), or give them to fans for free. Then you set up a script which sells album for these coins... Exchange rate is floating, so amount of money you get depends on popularity etc.

2. You can give people a token with each digital music purchase, this token confirms that they purchased music, it's like a digital equivalent of a signed physical disks. People can then re-sell these tokens...

3. Yeah, you can send a piece of stock with each purchase... It might make it more attractive to buy your music.

Yes, software isn't quite ready yet, we are working on it...

I'm willing to help anybody who wants to use colored coins for anything (as long as it is reasonable), but currently I'm busy with basic client.

[crazy_rabbit]

What if I sell 1 Colored bitcoin at $200 with the promise you can always redeem it for $100?

Crazy Rabbits Giant Carrot Fund?

[killerstorm]

What if I sell 1 Colored bitcoin at $200 with the promise you can always redeem it for $100?

Crazy Rabbits Giant Carrot Fund?

That's basically a put option with $100 strike.

Premium depends on how much of a Bitcoin you have colored. If you color a whole Bitcoin, premium is basically zero, that's an insanely good deal.

Well, premium is (Current Bitcoin Price - $200), to be exact. E.g. if mtgox price is $210, premium is $10.

Currently MPex sells this month puts@101 for 0.0668 BTC (=$13 USD) and next month puts@101 for 0.145 BTC (=$29 USD).

If you offer puts without expiry date they should be priced way above that. However, on the other hand, MPex is probably more reputable.

[RV1969]

I would suggest purple and green.

[MiracleRiver]

Q: could you sell tickets for a concert with colored Bitcoins? So then there is an open market for the tickets for fans and dealers to buy and sell with security. Then the final person to own the "ticket" can redeem it at the door of the concert?

[killerstorm]

Q: could you sell tickets for a concert with colored Bitcoins?
 So then there is an open market for the tickets for fans and dealers to buy and sell with security. Then the final person to own the "ticket" can redeem it at the door of the concert?

Yes

[MiracleRiver]

WOW! I'm starting to grasp this. The potential is unlimited.

And the buyer(s) would know it's an authentic "ticket" because they can see it's been issued/verified by the concert organisers?

And could I specify that a "ticket" cannot be resold? So the first buyer has to redeem the ticket at the door to stop dealers reselling for huge amounts?

Thanks for you help!

[killerstorm]

And the buyer(s) would know it's an authentic "ticket" because they can see it's been issued/verified by the concert organisers?

Yes.

And could I specify that a "ticket" cannot be resold? So the first buyer has to redeem the ticket at the door to stop dealers reselling for huge amounts?

Well, it is possible to detect whether ticket was transferred to another address before it was redeemed. So organizers can ban tickets which were transferred, which would make reselling meaningless.

Dealer might resort to a trick: instead of transferring ticket to a new address, he will sell private key of his own address. However if buyer receives a private address he cannot know whether he bought an unique ticket or same ticket was sold to other people many times. So buyer will buy from a dealer only if he trusts this dealer.

So this discourages reselling, but does not completely eliminate it.

[MiracleRiver]

Thank you so much for your help and advice.

It really is amazing.