Kinstone

Kinstones are mystical green, red, blue, and gold medallion segments found in The Minish Cap, that indirectly yield rupees, pieces of heart, and sometime even begin sidequest events, when two Kinstone pieces of identical color and shape are fused. These Kinstones, created and generously hidden about Hyrule by the tiny Picori, are seen as a sign of immense "happiness", especially if two people are engaged in Kinstone Fusion.

Types and Function
Green Kinstones can be found by cutting up grass and bushes, digging, or killing enemies, and is the most common Kinstone available in The Minish Cap. These Kinstones commonly yield rupee rewards when joined. The Goron Merchant sells Green Kinstones for 50 Rupees at his stall in Hyrule Town. Blue Kinstones are less common in the overworld of The Minish Cap, even though they can be obtained much like Green Kinstones, in that simply cutting shrubbery, digging, or killing enemies will likely reveal them. The Blue Kinstones are most notable for their role in fusing to the Mysterious Walls hidden within the caves of Hyrule, aiding in the completion of the Goron Sidequest. The Goron Merchant sells Blue Kinstones for 200 Rupees.

Red Kinstones are the rarest of these readily available fragments, so rare that they can only be bought or claimed from treasure chests. The fusion of red Kinstones often yields more gratifying rewards, such as Pieces of Heart, 50 Rupees or more, and are even known to open previously inaccessible passageways through waterfalls, tree trunks, and cave walls. Sometimes the fusing of these Kinstones yields a treasure chest that holds another red Kinstone. The Goron Merchant sells Red Kinstones for 300 Rupees.

Gold Kinstones are the only type that cannot be found in the overworld or bought; they are only discovered and used as a function of the plot. The Castor Wilds, Cloud Tops, and Veil Falls are the only regions that incorporate these Kinstones, used to open various passageways necessary for Link to continue his journey. These Kinstones are also the only type to never fuse with another Kinstone from a living character in The Minish Cap, instead joining with markers that stimulate the opening of such passageways.

Kinstone Bag
The Kinstone Bag is a Kinstone-carrying item received in Hyrule Castle Town after the completion of the Deepwood Shrine. Over the course of the game, the bag will grow and bulge as Link collects more Kinstone pieces; the bag has a infinite Kinstone carrying capacity. The Kinstone Bag will be turned into a Tingle Trophy by Tingle and his brothers after Link fuses Kinstones with all 100 kinstone-holding characters in the game.

Trivia
A certain Goron Merchant sells Green, Blue and Red Kinstone pieces at a kiosk in Hyrule Castle Town. This is a viable way of collecting red kinstones, but if you are looking for large numbers of blue and green kinstones, it is wiser to purchase white Picolyte from Beedle instead. If you just need a small number of blue and green kinstones, they are available for free all around Hyrule.