Colored coins - Definition from the Hotspot Shield Encyclopedia
Colored Coins refer to a methodology that associates real world assets with addresses on the Bitcoin network. Colored coins specifically apply to crypto currencies and offer an alternative usage for things like Bitcoin as it takes advantage of the header information that can be added to a Blockchain. An example of a colored coin could be a movie theatre. They could issue 200 units or digital tokens, and each unit could represent a Watch X movie on Screen Y at any time. Basically a promise that can be redeemed at a physical location or for a physical purpose. Other potential uses could be coupons, subscriptions, smart property or digital collectibles.