Rainbow technology offers a novel method for data storage by encoding and printing data on paper using colored geometric shapes, allowing for up to 2.7GB per square inch. Data is read through specialized scanners that decode the printed colors back into digital format, with potential applications including 'rainbow cards' which can hold 5GB of data. While the technology presents advantages in cost and environmental friendliness, it also faces challenges such as data degradation over time and susceptibility to tampering.