Creating a cryptocurrency is theoretically possible for anyone, but few people have the skills or finances to do it.
The effort doesn’t stop after a new cryptocurrency is created; it needs to be promoted, listed on exchanges, and maintained and updated over time.
Know the difference between tokens and coins
To get started, you must first understand the difference between tokens and coins. Coins like Bitcoin and Litecoin are “cryptocurrencies,” while tokens like Basic Attention Token are “tokens” built on top of established blockchains like Ethereum. Additionally, tokens have no value or purpose outside of a single group or community.
Unlike fiat currencies, which are controlled by a central bank, cryptocurrencies are decentralized. Typically, users want to be able to save, develop or transfer wealth with their currency. Crypto’s decentralized nature has made it popular in recent years.
However, ordinary people must have a comfortable 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 can also be purchased with tokens. Because tokens can also be used as a kind of contract. Like a work of art, non-fungible tokens (NFT) are digital assets that cannot be exchanged for other digital assets. Additionally, there are other ways DeFi tokens can be used.
How do I create a new blockchain?
The most difficult approach to creating a cryptocurrency is to create a new blockchain from scratch, which requires extensive technical skills.
Many online tutorials are available but require a certain level of prior knowledge and experience. Even so, you may not have all the tools you need to start a new blockchain from scratch.
Forking an existing blockchain can save time and effort compared to building a new one from scratch. An example would be taking the open source code on GitHub and changing it before issuing a new coin with a different name.
For example, Litecoin was forked from Bitcoin by its creators. Later, Litecoin forks like Garlicoin and Litecoin Cash were created. The creator still needs to know how to edit the current code to complete this procedure.
What can you do?
Creating a new cryptocurrency or token on an existing platform like Ethereum is the easiest option for people unfamiliar with coding. Ethereum’s ERC-20 standard is used by many new tokenization projects.
It’s possible to hire a creative service to do all the technical work and then give you a final output if you’re not familiar with coding code yourself.
After reading the information above, you can start creating your own coin. If you hire a third party to generate the new currency, some of these phases are eliminated. Nonetheless, these components of establishing a cryptocurrency should be familiar to anyone who will be doing the work.
Consensus mechanisms are protocols to decide whether or not the network will honor a particular transaction. A transaction can only be completed if it has the approval of all nodes involved. “Achieving consensus” is another term for it. You need to figure out how the nodes perform 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 others.
Using the three ways previously described, this is a continuation of that. Deciding where a currency or token will reside on the blockchain is a critical step in this process. Your technical competence, your comfort and your project goals play a role in your decision.
It is based on the nodes of any distributed ledger technology (DLT), including blockchains. As a coin designer, you are responsible for figuring out how your knots work. Do they want a permission or a permissionless blockchain? What specifications does the hardware have? How does hosting a website work?
Other things to consider
There should be no ambiguity about how the blockchain and its nodes work before issuing the currency. Things cannot be undone or undone after the main mesh has been activated.
Therefore, it is common to conduct preliminary tests on a testnet. Things like the cryptocurrency’s address format or the integration of the inter-blockchain communication protocol (IBC), which allows the blockchain to connect to other blockchains, could fall into this category.
Application programming interfaces are not available on all systems (APIs). A newly developed cryptocurrency’s ability to stand out and gain popularity can be enhanced by the inclusion of APIs. Many third-party blockchain APIs are also available for support.
People won’t use cryptocurrency if it’s too complicated to understand. Frontend and backend programming should be done with future developer upgrades for Web and File Transfer Protocol (FTP) servers.
Failing to take this final step into account caused problems for many who started or pursued an ICO in 2017 and 2018. They may have had no idea that generating or commercializing new currencies could result in penalties or criminal prosecution as cryptocurrency was still in a legal gray area at the time.
It is a good idea to familiarize yourself with the rules and regulations governing securities offerings and related issues before introducing a new currency. Due to the ever-changing nature of the challenges, you should consider hiring an attorney with knowledge in this area to assist you with this process.
This is just the tip of the iceberg when learning how to create a cryptocurrency.
Creating a new coin or token requires more than just technical know-how; It also needs to think about how the network will be maintained and how the coin or token can bring value to others.
This often requires hiring a development team, a marketing team, and other employees to help maintain and improve the system.
Creating a cryptocurrency can be difficult and expensive, and there is an excellent chance of failure. 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 to generate their own cryptocurrency, simply investing in it may be a better option. Opening an investment account is a great way to start in this direction.