There is a little bit of a feeling of ‘hurry up and wait’ about Bitcoin. On the one hand, it’s a revolutionary technology with huge potential as a currency, an asset, and as a decentralized method to do all sorts of different things like contracts and exchanges. And, Bitcoin has had enough meteoric success in its short 5 years of existence that some people have really begun to take notice. On the other hand, projects like Colored Coins, Mastercoin, Ethereum (yeah, I know, not technically Bitcoin) and others are met with massive fanfare when first announced, and then nothing seems to happen with them for what seems to be ages.
There are a number of things that might launch Bitcoin into everyday use for the average Joe, and one of them is when people start finding themselves using Bitcoin for other things than a currency. If I’m an investor and I find that the easiest, cheapest way for me to trade my favorite stocks is through via a decentralized exchange or through a smart contract, then I’m going to learn how to do that. If I’m an author or inventor, I can copyright my work by adding it as information in a transaction. That information will be written into the blockchain so that there will be irrefutable proof of when I came up with that idea. If I start a company, I can incorporate the same way and issue shares using marked Bitcoins as tokens. As soon as some of these additional uses of Bitcoin become easy enough to use for people to start picking them up, then we’ll see the slow creep of adoption build into an avalanche.
One hair salon in Brisbane Australia is helping prove this concept by funding its expansion to four new sites in that city using Colored Coins.
Klippt is a hair salon with three current locations in Brisbane. The founder, Mitch Brownie, actually started out with a small computer repair shop, but when the hair salon next to his store went belly up, he approached the management of the shopping mall with a proposal to take it over. Within a short amount of time, that shop was a successful enough to allow Mitch to open two more locations, both of which paid off their startup costs and began turning a profit in only six months.
With this early success, Mitch has set his sights higher. He wants to expand first across Brisbane, then across Australia, and then go international. He is currently gearing up for what seems to be only the second Colored Coin IPO on record. (The first, Vapetropolis, sells marijuana paraphernalia.)
The way to take part in a Colored Coin IPO is like this: First, the business owner takes Bitcoins and, using a Bitcoin wallet specially designed to ‘mark’ the coins, creates tokens marked as shares in his company. The owner then advertises the IPO and gets investors who can pay in whatever currency the owner accepts. When the investment is received and confirmed, the owner sends the colored tokens back to the investor. Done.
In the old days, those tokens would have been actual slips of paper, stocks. It has been years since anyone really took ownership of the actual paper, though. Most traders trade electronically and it would be impractical to settle with the actual documents. Everything is kept track of through a centralized exchange like the one on Wall Street. With Colored Coins, though, the tracking mechanism is the blockchain. The investor can hold the tokens, sell them back to the owner, or trade them to another investor without the need of a centralized exchange. One note about this is that you have to use a wallet specifically designed to create and accept colored coins. Sending colored coins to a non-colored coin wallet can cause of the loss of the information that marks those coins. They’ll retain their value as Bitcoins, but
they’ll have lost their value as tokens