So let's say we use red and green as 2 colours. If we enable the alpha on both of them and overlap each other, they can create any shade of orange or yellow thus technically making a 3rd colour to the naked eye or if you use the colour picker. Is this fine and won't result in disqualifications?
Well, technically it's possible. But I'm not at all sure that such a trick is appreciated by the jam community. This assumption was approved after a vote. You will not be disqualified, but your game may get low scores in the "1-BIT" category.
