Creating a cryptocurrency is theoretically possible for anybody, but few people have the requisite skills or finances to do it.
The effort doesn’t stop after a new cryptocurrency is created; it has to be promoted, listed on exchanges, and maintained and upgraded over time.
Know the difference between tokens and coins
To get started, you must first understand the difference between tokens and coins. Coins such as Bitcoin and Litecoin are “cryptocurrencies,” whereas tokens such as Basic Attention Token are “tokens” that operate on top of established blockchains like Ethereum. Additionally, tokens do not have any value or purpose outside of a single group or community.
Unlike fiat currencies, which a central bank controls, cryptocurrencies are decentralized. Typically, users want to be able to save, develop, or transfer wealth using their currency. Crypto’s decentralized nature has made it popular in the past years.
However, ordinary folk needs to have a convenient experience in the industry by using the primary, well-established platforms like Binance, Coinbase, or Immediate Edge.
On the other hand, Tokens often reflect a contract or have a defined value for a blockchain application. For example, the Brave browser’s Basic Attention Token rewards content providers with tokens.
An event ticket or loyalty points may also be purchased using tokens. This is because tokens can also be used as a kind of contract. Like a piece of artwork, non-fungible tokens (NFT) are digital assets that can’t be exchanged for other digital assets. Additionally, there are other ways in which DeFi tokens may be used.
How to make a new blockchain?
The most challenging approach to producing a cryptocurrency is to build a new blockchain from scratch, which requires extensive technical abilities.
Many online tutorials are available but presume a certain amount of prior knowledge and experience. Even so, you may not have all the tools you need to start a new blockchain from scratch.
A fork of an existing blockchain might save time and effort compared to building a new one from the ground up. An example would be to take the open-source code on GitHub and modify it before issuing a new coin with a different name.
For example, Litecoin was forked from Bitcoin by its creators. Forks of Litecoin, such as Garlicoin and Litecoin Cash, were subsequently created. The creator must still know how to edit the current code to complete this procedure.
What can you do?
Making a new cryptocurrency or token on an existing platform like Ethereum is the simplest option for individuals uncomfortable with coding. Ethereum’s ERC-20 standard is used by many new projects to produce tokens.
It’s possible that you could use a creative service that conducts all the technical work and then delivers a final output to you if you aren’t comfortable with programming code yourself.
After studying the above information, you’re ready to begin creating your own coin. When hiring a third party to generate the new currency, some of these stages will no longer be applicable. These components of establishing a cryptocurrency should still be known to everyone who will do the work.
Consensus mechanisms are protocols to decide whether or not the network will consider a particular transaction. A transaction can only be completed if it has the approval of all the nodes involved. “Achieving consensus” is another term for this. You’ll need a way to identify how the nodes will do this task.
Initially, Bitcoin’s proof-of-work was used as a kind of consensus. Another prominent consensus approach is Proof-of-Stake. In addition, there are countless more.
Using the three ways outlined before, this is a continuation of that. Deciding where a currency or token will reside on the blockchain is a critical stage in the process. Your degree of technical expertise, level of comfort, and project objectives will all play a role in your decision.
The nodes of any distributed ledger technology (DLT), including blockchains, serve as the foundation. As a coin designer, you are responsible for figuring out how your nodes will work. Do they want permission or a permission-less blockchain? What are the specifications of the hardware? What’s the process for hosting a website?
Other things to note
There should be no ambiguity about how the blockchain and its nodes work before they issue the currency. Things cannot be undone or reversed after the mainnet has been activated.
As a result, it’s standard practice to run preliminary tests on a testnet. Things like the cryptocurrency’s address format or the inter-blockchain communication (IBC) protocol integration, which allows the blockchain to connect with other blockchains, might fall under this category.
Application programming interfaces are not available on all systems (APIs). A freshly developed cryptocurrency’s ability to stand out and gain popularity may be improved by including APIs. Many third-party blockchain API providers are also available for assistance.
People won’t utilize a cryptocurrency if it’s too complicated to understand. Programming on the front and backends should be done with future developer upgrades for web and file transfer protocol (FTP) servers.
Failure to take this last step into account led to problems for many in 2017 and 2018 who started or pushed an ICO. It’s possible they had no idea that generating or marketing new currencies may lead to penalties or criminal prosecution since the cryptocurrency was still in a legal grey area at the time.
It’s a good idea to familiarise yourself with the rules and regulations governing securities offerings and related issues before launching a new currency. Because of the constantly changing nature of the challenges, you may want to consider engaging a lawyer with knowledge in the field to assist you through this process.
This is only the tip of the iceberg when learning how to build a cryptocurrency.
Creating a new coin or token requires more than technical know-how; it also necessitates thinking about how the network will be sustained and how the coin or token may give value to others.
Doing so frequently necessitates hiring a development team, a marketing team, and other personnel who will assist in maintaining and enhancing the system.
Creating a cryptocurrency may be difficult and expensive, and it is an excellent chance it will fail. It is estimated that there are more than 5,500 cryptocurrency tokens on public exchanges and many more that have failed over time.
For individuals who don’t have the time, money, or interest in generating their own cryptocurrency, just investing in it may be a preferable option. Opening an investing account is a terrific approach to get started in this direction.
Read More: Can someone create a new cryptocurrency? Here’s how one can go about it