Master Funakoshi adopted the Kyu/Dan rank system and uniform used in Judo. This system uses coloured belts (obi) to indicate rank. Originally, karate had only three belt colours: 8th rising to 4th kyu: white; 3rd rising to 1st kyu: brown; 1st and higher dan: black.
Today there are many different belts, starting from 10th Kyu to 1st Kyu. Karate and indeed other martial arts organisations have a verying order of seniority. As an example in ESKA the blue belt means someone has only just started on their Karate journey and holds the rank of 10th Kyu. In some JKA clubs a blue belt is 5th Kyu.
Gichin Funakoshi at the time of his death was a 5th Dan under his system. After his death he was posthumously awarded 10th Dan.