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Colorado is called the Centennial State because it became a state in 1876, the same year that the United States was engaged in its centennial celebration to commemorate 100 years since the signing of the Declaration of Independence. Colorado was the 38th state, and the only state admitted to the union in 1876. Earning statehood isn’t an easy thing, and Colorado’s leaders had worked for a long time to prepare their petition — and had actually been denied once before. The timing of the admission led the leaders of the time to begin calling Colorado the Centennial State. The name caught on in the rest of the country, and modern legislators have voted to make it Colorado’s “official” nickname today. Most states, Colorado included, have many different nicknames in different places and among different groups of people. In most cases states only have one nickname that’s been voted on by the legislature and can be used on official documents, though. For Colorado “Centennial” holds this honor.
The Territory of Colorado was created by the U.S. Congress in 1861. Its name came from the Rio Colorado — the Colorado River — which was named by Spanish explorers in the region. In Spanish, the word colorado means "colored red,” and was probably used in reference to the red soil and rock formations that occur throughout much of the state.
On 1 August 1876, sixteen years after the territory’s formation, the State of Colorado was admitted to the Union and became the 38th state. That year, the U.S. was celebrating the 100th anniversary of the signing of the Declaration of Independence, which happened in July 1776. Among the events held that year was the Centennial Exposition, which was held in Philadelphia, Pennsylvania, and was the first World's Fair to be held in the U.S. As the only state admitted that year — the only one between 1867 and 1889, in fact — Colorado quickly became known as the Centennial State by locals and strangers alike.
Colorado would almost certainly not be called the Centennial State if it had been accepted as a state on its first try, though. The U.S. Congress passed an act that would have allowed Colorado to be granted statehood in 1865, 11 years before the United States' centennial, but then-president Andrew Johnson vetoed the act. Johnson was succeeded by Ulysses S. Grant in 1869, and in 1870, Grant began advocating for Colorado to be admitted as a state. On 3 March 1875, the U.S. Congress again authorized Colorado to become a state, and Grant signed Proclamation 230 - Admission of Colorado Into the Union in 1876.
Most U.S. states have a number of monikers and descriptors; most have a state tree, a state flower, and a state animal, for example. Some of the these are formal and some aren’t. In most cases, the main distinction between a formal and an informal — or an official and an unofficial — designation is an act of the state congress. The main reason why “Centennial” is the official nickname of Colorado is because the Colorado legislature has declared it as such. It is used on official state documents, and is also the phrase used on things like some license plates and the commemorative Colorado quarter, which is in wide use in modern U.S. currency.
Colorado has been known by many different names since it first entered the union. One of the most common nicknames, for instance, is "Colorful Colorado," a name that the state government has used in the past on signs, tourism information, and other promotional material. Colorado's rich mineral deposits have led to the alternate nicknames "Silver State" and "Lead State," its high altitude has led to it being called the Highest State. It has even been called the Buffalo Plains State because of the bison that once roamed there.