You might have heard of Bitcoin or Ethereum, and maybe even Ripple, but in fact, there are over a thousand different coins and tokens available. There are over 1,384 cryptocurrencies in use worldwide. That’s a lot of cryptos! So, why not learn how to create a cryptocurrency coin?
Before we get started though, there are three things you need to know:
1. You Need A Good Idea
Building a token/coin for the sake of building a token/coin is doomed to fail. It needs to have a purpose (it needs to add value to the world).
2. You Need to Earn People’s Trust
To do this you need to build a community. This is the following for your cryptocurrency. Maintaining a crypto community is a tough job, thus pay attention to this point.
3. You Need Working Knowledge of Crypto Security & Coding
You may hire talent or take tutorials on how to create a crypto currency coin. By the end of this article, you’ll understand the basics of how to create a cryptocurrency and the importance of building trust among the community.
How Does a Cryptocurrency Work?
A cryptocurrency is a digital commodity intended to act as a means of exchange throughout the world. In a cryptocurrency or a blockchain system, the coins are stored in a digital ledger or computerized database with the help of a secured and strong cryptography. This makes the transaction record fully secured and safe from hacking. Also, the data cannot be accessed until it is fully verified by the customer.
Source: mlsdev (How to Create a Cryptocurrency Coin)
Bitcoin, in 2009, was the first-ever decentralized cryptocurrency of the world. And today, there are many cryptocurrency coins available for trading i.e. Bitcoin, Ethereum, etc.
There’s a big difference between building a coin and a token. A coin has its own blockchain, very expensive, and takes some time building. Whereas the token is built on an existing blockchain, isn’t much expensive, and doesn’t take much as much time relatively. Now, what’s the most important thing to understand here is how to build a blockchain. Here’s what you need to have to before you start working on building a blockchain.
Hiring The Development Team
Hiring the right developer for coin, token and smart contract development can make a big difference. Best practice is to become involved in the blockchain community. For this, you can join blockchain events, connecting with new people and building relationships within the industry.
Finding experienced blockchain developer can be a bit tricky because the demand for blockchain developers is through the roof.
Identify a Suitable Use-Case
There are three genuine things that a blockchain can do easily, i.e Data Authentication & Verification, Smart Asset Management, and Smart Contracts. And if you learn to identify a suitable use-case, you can hone on what you want your blockchain to do.
Source: MSLDEV (How To Create a Cryptocurrency Coin)
Identify Suitable Consensus Mechanism
The identification of suitable consensus must be based on a suitable use-case. Otherwise, it might get complex for you to build your blockchain
Choosing a platform for building a blockchain is probably the most important step. The most common platforms include BigChainDB, Chain Core, Corda, Credits, Domus Tower Blockchain, Elements Blockchain Platform, Eris: DB, Ethereum, HydraChain, Multichain, Quorum, Stellar, and Open chain. Choose the most suitable platform according to your cryptocurrency coin.
The next step is designing the nodes. A blockchain can be permissioned, as well as, permission-less from the government. Its solution can be private, public, or hybrid. You need to consider whether nodes will run on the cloud or not, and decide on the base of the operating system you are using.
Design Blockchain Instance
One of the tougher things in building a blockchain is designing its instance. Following things need to be considered:
- Asset Issuance
- Asset re-issuance
- Atomic Exchanges
- Key Management
- Multi Signatures
- Native Assets
- Address Formats
- Key Formats
- Block Signatures
- Steps to Create a Cryptocurrency Coin
Understanding everything steps by step makes learning easier for everyone. The same is the case to create a cryptocurrency coin.
Define Purpose to create a cryptocurrency coin
The first thing you need to do is to think about the actual reason for making a cryptocurrency and define its purpose thoroughly. In other words, there must be a strong reason for the existence of the cryptocurrency you are going to develop. And if you fail to give a strong reason, what will you answer your customers? For instance, Nano is a cryptocurrency coin and the reason to use it is its high speed and feeless digital payments. Exactly the same way, you need to describe the reason for people to use your cryptocurrency. Step 1 is Done!
Consider the Legal Implications
Following the first step, the next thing to do is to consider the legal implications well and strictly act upon it. As you know the blockchain globe has developed rapidly, so if you don’t follow the laws and regulations, it might cause serious issues for you and your cryptocurrency coin. In short, make sure that everything you’re doing is legal throughout the entire process by consulting with a legal professional.
Define a Budget
In step 3, the tip to follow is to define a budget. Remember, creating your cryptocurrency and developing is not as easy as you are thinking. It requires some financial resources, especially when you don’t have any support team members that can market, document, and create a cryptocurrency coin.
Did You Know?
More than $270 billion in assets have been distributed in Blockchain transactions to date.
Hire External Auditors
Only hiring a strong development team wouldn’t be enough for you. You need external auditors as well. An external auditor performs an audit, which exactly matches the laws and regulations of the cryptocurrency globe and financial statements of government entities. The main task of external auditors in cryptocurrency coin is to constantly conduct security audits. You can follow the MakerDAO external security audits if you’re new to this concept.
Promote Your Coin & Community
This is probably the most crucial and underrated. Without the promotion and marketing of your newly developed cryptocurrency coin, it’s not going to get any clout. Promote your newly started project is via Press releases, Social Media, Twitter, Telegram, Reddit, and Discord, and Blogs. If possible, get in touch and partner with a popular cryptocurrency exchange. Nurture and grow up in your community.
Following all these steps will build up a new blockchain, with the help of which, a new and own cryptocurrency coin can be created and developed.
Having read this far, you already have a fairly clear picture of what it takes to create a new blockchain. Before starting any new project, take a deep breath and evaluate twice if this is something you should be investing your time and money in. And if you are confident enough and actively looking for blockchain developers who can bring life to your ideas.
Still, want to know more? VAIVAL Technologies has in-house developers that are more than capable of building MVPs. And if it’s a custom software development company you’re looking for, reach out to us here to talk to our experts.
Explore how your business can benefit from its own cryptocurrency and blockchain – schedule your free 30-min consultation with VAIVAL Technologies blockchain professionals.