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How to create your own cryptocurrency

Muhammad Faizan

A cryptocurrency is a virtual currency shielded by cryptography and backed up by blockchain, which serves as a digital wallet to exchange products and services. Due to cryptography, counterfeiting and double-spending are nearly impossible.

Characteristics

To start building a cryptocurrency, the three most important things one needs to ensure are:

A cryptocurrency should have purpose

Creating a coin or token solely for the purpose of enjoying lucrative trades is doomed to fail – it must serve a reason, a purpose that adds value to the world, something fascinating that can attract investor’s attention. For example, financial security can be one of its purposes; in the aftermath of the global financial crisis of 2008, as a way for people to regain control of their finances, cryptocurrency was created, which enabled users to manage finance without relying on businesses banks, or governments. It fulfills a huge gap of financial trust in the market, as it targets every user that is a customer of other financial institutions.

Community’s trust and confidence

There is a need to build a community of investors, trusting that the coin/token shall prove beneficial to them and the society. Crypto coins and tokens can only experience growth once it establishes trust in people. Maintaining a crypto community can be very difficult but extremely beneficial once it’s established.

Knowledge of blockchain, coding, and cryptography

A highly specialized team of coders with crypto knowledge regarding security, mining, and blockchain databases is imperative. Developers that understand the proper functionality of the coin/token are necessary. A talented teamdevelopers who have worked with blockchain technology for a long time are recommended is needed to help bring up the vision of crypto into reality.

How to create a cryptocurrency

A cryptocurrency can be created in two ways:

  1. creating a ‘coin’ that shall have its own blockchain

  2. building a token via applications such as NEO, Ethereum, or a similar network

The first step in cryptocurrency is deciding whether one wants to make a “token” or a “coin.” Should one start from the beginning, or should one construct a token based on trusted and widely available technology?

Cryptocurrencies have both coins and tokens. A coin has its own blockchain, while a token is made on top of an already existing blockchain. As a result, a blockchain can have thousands of tokens, while a coin can only have one.

Tokens can be generated using any of these (Ethereum, Neo, etc) blockchain technologies. However, Ethereum is the most widely used blockchain for developing tokens. The figure attached below illustrates the features of each platform:

Ethereum-based tokens are known as ERC-20 tokens. The Ethereum blockchain is an ideal learning environment for those who want to learn how to build a cryptocurrency since it has a high degree of confidence. To build a token on Ethereum, developers need to learn SolidityEthereum’s programming language, which is the only way to build a token on Ethereum.

Deciding between the two

Choosing between tokens and coins is a major decision since it affects many aspects of the process, including the amount of cash needed to be invested. Understanding how to construct a crypto coin or token, which necessitates the development of a blockchain from the ground up, is both costly and time-consuming. A professional development team is needed to set up everything.

Suppose one is unwilling or unable to create a new blockchain because it’s expensive and time-consuming. One can generate a token using an already existing app and operate on its blockchain, such as NEO or Ethereum. Although developing dAppdecentralized application or token requires a significant amount of resources, time, and extremely talented development experts, it is simpler and less expensive to do than creating a coin and constructing a blockchain.

Initial Coin Offerings

Initial Coin Offerings (ICOs) are a lot like IPOs (Initial Public Offerings). Blockchain-savvy businesses use initial coin offerings (ICOs) to collect funds for their crypto ventures. Rather than getting shares, the investors receive “tokens.”

Initiating ICOs provides a fast way to raise funds for a project. However, to make it a successful launch, one needs to ensure few things:

• How shall the coin/token benefit a particular industry? What issues can it address?

• An expert team of developers to create ERC-20 tokens.

• A team of experts as the development team, to build the ICO smart contract.

• A well-written, whitepapera document that explains the proposal, the issue it solves, the procedure it follows, how it operates, and the technology it employs.

• Marketing: networking, community growth, Website, crypto forums, and social media are all part of a marketing strategy

• A community management team

The approximate cost of creating a cryptocurrency

The development of smart contracts, tokens, audits, whitepapers, marketing, and public relations all require a healthy sum of money. Since there is a shortage of developers, smart contracts, and token developers, professionals charge a lot of money. Their rates typically start at about $100 per hour and may increase depending on their experience. The time it takes a developer to complete a smart contract and token varies depending on the need. An approximation is made at around two weeks, which means a total of $8,000 is needed for basic functionality operations. Audits aren’t cheap either and can cost anywhere between $3,000 to $10,000. Thus, it’s essential to forecast feasibility, which contains all of these costs.

Conclusion

After covering the technical and non-technical parts required to build a successful cryptocurrency through an ICO, one still needs to understand that the most important thing, in all of this, is the ‘idea’ (purpose) behind the cryptocurrency’s creation. The project shall only succeed if it has a good idea as it needs to stand out among the 1,384 cryptocurrencies that are already listed in the market. To become successful, one needs to ensure that their project has a clear objective and brilliant solution to an important issue.

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