IOTA is working intensively on its practical suitability and wants to be ready for use in a broad corporate context. The IOTA Foundation's developments include various milestones, including the recently announced IOTA Colored Coin (ICC). This utility token can “discolor” and thus assign a different value or a different meaning to an object in certain situations.
Personalize IOTA Colored Coins ICC
The earmarked coins allow manipulation-proof presentation of real-world assets. The labeling is done by assigning a label in the hash as a so-called meta.
As part of the growing DeFi industry, IOTA's developments are particularly gratifying, because the ICCs can map all kinds of assets and ownership, such as deeds, tickets, shares, corporate bonds or land. However, this function can only be used if you buy IOTA tokens in advance. This, in turn, should narrow the offer and thus give the IOTA course new momentum.
When inking tokens, users never change their actual maximum value. By assigning a new color via the color code in the hash ID, the original IOTA Colored Coin is overwritten. The original IOTA token receives the hash code NEW and is therefore regularly restored. It is then ready for a new "coloring".
Digital assets or for fees
The application-specific tokens can only be used and overwritten by the user who has access to the token addresses. In order for the system to assign the new code to a specific property or asset, the opposing values must be known beforehand. For example, red means a share and yellow means a corporate bond.
However, the tokens only change color in the respective application / wallet according to the agenda. For all other applications, the IOTA Colored Coin remains a conventional IOTA token, i.e. 1i.
In the crypto industry, the IOTA price is expected to rise as more people buy the token and, as a result, it becomes more noticed. The “coloring” method should be the right way to do it, after all, the token is not needed to use IOTA. It is therefore only used for value transactions.
- Iota = 1 Iota = 1i = 1i
- KiloIota = 1 Kiota = 1Ki = 1,000i
- MegaIota = 1 Miota = 1Mi = 1,000,000i
- GigaIota = 1 Giota = 1Gi = 1,000,000,000i
- TeraIota = 1 Tiota = 1Ti = 1,000,000,000,000i
- PetaIota = 1 Piota = 1Pi = 1,000,000,000,000,000i
IoT ideal economy for IOTA Colored Token
IOTA Colored Coins simplify the sorting of different network points in the Internet of Things IoT. The first colored token was created on the Bitcoin blockchain in 20114 and was initially an asset linked to Satoshis. This was based on older implementations that allow the encoding of assets in the blockchain.
This was possible with the OP-Return script code, a robust code and at the same time an extremely inexpensive method to embed data on the blockchain. Counterparty and OMNI Layer already recognized the great potential of this technology when it was introduced in 2014, while Bitcoin enthusiasts preferred to follow the advice of their own developers ("This is not a good idea") and stay away from it. The project was largely abandoned, although the technology was able to hold up.
Competition for the Ethereum ERC-20 token
IOTA Colored Coins ICC is an alternative to the ERC-20 tokens on the Ethereum blockchain. The colored tokens are able to replace expensive and time-consuming financial transactions and to quickly and easily process transfers of ownership.
This also applies to assets that do not yet exist. The potential of colored tokens is huge because it can be used to trade practically any financial product worldwide with other devices connected to the Internet. This eliminates fees and commissions and the transactions take place in real time. However, this also shows the possibility of paying fees to the IOTA Foundation in the form of the new colored coins.
Like all other colored tokens, the IOTA colored coin depicts real physical assets, behind which there are financial obligations. This is exactly where the colored coins are at risk if, for example, there is nothing real behind the coins or if the issuer does not meet their financial obligations. Another risk is the still immature technology and its applications. Because there are so far only a few projects and companies that deal with the colored coins.
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With the Genesis transaction, IOTA will issue the first ICC via the so-called value transfer application. All IOTA Colored Coins are assigned the new color code via hash ID. New ICCs could be created later using smart contracts. However, this is not possible afterwards with the already completed issue. However, the IOTA Foundation seems to be expecting a large demand and is already considering internally to split the smallest IOTA Token 1i into even smaller parts.
The IOTA Colored Coins have these advantages:
- Better handling of metadata
- Improved performance and efficiency
- Low prices and minimal effort
- Support for transactions without confirmation
- Functions for smart contracts
- Definition of a certain period of validity
- Definition of transmission specifications
- Issuers determine fees
- Multiple users can issue and create assets
Assets on the IOTA tangle
The value of digital assets must be secured by the issuer's obligation so that the holder of the asset can redeem it in the physical world at any time for the value that it represents. Colored tokens are to replace today's smart contracts, because they are much easier to prove the value of a property than before. Blockchain technology is extremely adaptable here, because a new layer is added.
- Colored coins
IOTA Colored Coins cannot recognize normal nodes and wallets, so the introduction is tied to the completion of GoShimmer, in which nodes can reach a consensus without the coordinator. The colors are instructed by GoShimmer, they are always unique and correspond to the hash value of the transaction. The IOTA Colored Coin is not to be used as a replacement for the regular IOTA token.
IOTA colored coin for micro payments?
The IOTA Colored Coin represents a potential value generated by the data transaction and is immune to volatility. Its introduction is necessary if you look at the Internet of Things and understand that billions of devices will be connected in the IoT in a few years. Because every device is expected to trigger and receive a large number of data transactions. However, the IOTA Colored Token could therefore be used to pay fees for services.
For example, IOTA Colored Coins could be used as fees for IOTA Smart Contracts and consequently implement the vision of the micro-counting of the machine economy around Industry 1.4. With these visions and possibilities of the IOTA Colored Coins, it is clear why experts speak of a serious alternative for the Ethereum ERC-20 tokens. However, it remains to be seen how BaFin will evaluate these digital assets. After all, they have only just dealt with crypto tokens there.