It’s hard to avoid the word cryptocurrency these days. The world is changing before our eyes. It’s in the news, blogs, and even the big-time financial authorities. Those who miss this bandwagon now will be so far behind that they might never catch up.
Suppose you have a great business idea or you’re launching a startup and you want to take advantage of the new opportunities of cryptocurrency by creating your own cryptocurrency. How exactly do you do this? On the Internet, there is a wealth of information; however, as it frequently occurs, it can be contradictory, poorly organized, or simply hard to comprehend due to jargon from heavy industry.
This article will provide you with a clear understanding of what a cryptocurrency is, how it differs from a coin, how to design your own cryptocurrency, and whether it is useful to your business.
Best 3 Ways to Make a Cryptocurrency
Cryptocurrency can be created in three different ways, none of which are fast or easy. Listed below are how they work:
Make a New Blockchain
A blockchain must be created from scratch and is, by far, the most difficult way to create a cryptocurrency. There are online courses that will guide you through the process, but they assume a certain level of knowledge. There is a possibility that you won’t walk away from the event with everything you need to create your own blockchain.
Creating A Fork of An Existing Blockchain
The process of forking an existing blockchain might be quicker and simpler than creating it from scratch. This would entail modifying the open-source code found on GitHub and then launching a new coin under a new name. For instance, the developers of Litecoin forked Bitcoin to create it. In recent years, several forks of Litecoin have been created, including Garlicoin and Litecoin Cash. However, this process still requires the creator to know how to modify existing code.
Using An Existing Platform
Making a new cryptocurrency or token on an existing platform like Ethereum is the third and easiest option for those unfamiliar with coding. For example, many new projects create tokens on the Ethereum network using the ERC-20 standard.
A creation service can provide a finished product if you aren’t familiar with writing code.
How to Create a Cryptocurrency – In Simple 7 Steps
You can proceed with building the cryptocurrency after considering everything above. In the case of paying a third party to create the new coin, some of these steps will be less relevant. Even then, anyone creating a cryptocurrency should be familiar with these aspects.
Choose A Consensus Mechanism
The consensus mechanism is the protocol that determines whether or not a transaction will be accepted by the network. A transaction needs to be confirmed by all nodes in order to be completed. Getting consensus also refers to determining how the nodes will accomplish this.
In Bitcoin, the proof-of-work mechanism was used for consensus. Proof-of-Stake was also used as a consensus mechanism. In addition, there are many others.
Choosing A Blockchain
This goes back to the three methods mentioned earlier. A coin or token needs a home, and choosing the blockchain environment in which it will be based is an important decision. Your choice will be determined by your level of technical expertise, your comfort level, and your project goals.
Set Up the Nodes
In distributed ledger technologies (DLTs), including blockchains, nodes are the backbone of the system. It is important to decide how your nodes will operate as cryptocurrency creators. Would they prefer permission or permission less blockchains? Could you describe the hardware details? What about hosting?
Create The Blockchain Architecture
It is important that the developers are 100% certain about the blockchain’s functionality and its node design before launching a coin. As soon as the main net launches, there’s no turning back, and many things can’t be changed. Hence, it’s common to test things out beforehand on a test net. There are simple things like the cryptocurrency’s address format that can be incorporated into the blockchain, as well as more complex things like implementing the inter-blockchain communication protocol (IBC).
Every platform offers some application programming interfaces (APIs). APIs could make a newly created cryptocurrency stand out and encourage adoption. Furthermore, some third-party providers offer blockchain APIs that can be useful here.
Design The User Interface
A cryptocurrency is of little use if people find it difficult to use. File transfer protocol (FTP) and web servers should be current, and the programming on both the front and back ends should be designed to accommodate future updates.
Those who initiated or promoted ICOs in 2017 or 2018 failed to consider this last step, which led to troubles for many. In those days, cryptocurrency was a sort of legal grey area, and they may not have realized that creating or promoting new coins could result in fines or criminal charges. You may find it helpful to research the laws and regulations surrounding securities offerings and related topics before launching a new coin. You might want to consider hiring a lawyer with expertise in this area to assist you throughout this process. The issues are complex and regularly updated.