One thing that crypto-interested people often wonder about is the possibility of creating a cryptocurrency of their own, perhaps for business purposes or an entirely different reason.
If such an idea has crossed your mind several times, then this article might be what you’re looking for. Follow the guide and see how possible or impossible it is to create your own cryptocurrency.
It’s not a spontaneous decision, so your mind should be determined when trying to create a cryptocurrency. Consider these initial steps before you plunge on the tasks ahead:
- Have a good concept – Ask yourself if your idea needs to be tokenized? Will my new cryptocurrency bring something to the audience? Remember, without a good concept, the crypto is doomed to fail.
- Know people who will trust you enough – No one can launch a project alone; you need the support of a community, business partners and professionals. Building new connections and working on networking will do the trick.
- Understand how your crypto/token can work – Do your due diligence and learn in-depths of coding, how a cryptocurrency works, how your cryptocurrency will work, and what problem it will be solving? After all, you’re the one who needs to explain that to the public.
Advantages Of Creating Your Own Cryptocurrency
Some situations may occur, when creating a personal cryptocurrency might seem like a reasonable idea to fund your plans. Such cases include embodying your business idea, or a startup, but only if it ACTUALLY requires the blockchain to operate. In such a case, creating a unique cryptocurrency for the project will help incentivize the nodes donating their processing power.
Some of the advantages of creating personal cryptocurrency include::
- Reduction of Operating Costs – Cryptocurrency does not attract interest or exchange rates.
- Transaction Privacy – The customer data is protected and entirely under their control.
- Faster Transaction Execution – Transactions are completed at a much faster rate compared to the conventional system.
- Greater Number Of Customers – More customers are attracted because more financial options have been made available to them.
- Reduced Risk Of Fraud – Activities of fraudsters are greatly reduced because of the presence of high-level security.
The Process of Blockchain Creation
We can never cover enough about this rich process, but here’s the first look:
- Identify the purpose
- Select a consensus mechanism
- Select a blockchain platform
- Put the nodes in place
- Design the Internal Architecture Of The Blockchain
- Pay Attention to APIs
- Create the Interface
- Legalize your cryptocurrency
Identify The Purpose
Identify the strength of your business, its objectives, from the very start. Find out if your business will be focusing on smart asset management, smart contracts, or data authentication.
Select A Consensus Mechanism
The smooth operation of your blockchain depends on the participating nodes, which must be in agreement on which transactions that should be added to the block. This is overseen by the consensus mechanism, and there are many of them available, tailored to the needs of your business.
Select A Blockchain Platform
The chosen blockchain platform must correspond with your selected consensus mechanism. Below is a list of some of the popular blockchain platforms:
Pros: implements Tangle concept, a strong community, strong organization, quantum proof signatures
Cons: requires proof of work for it’s security, lack of smart contracts, centralized (requires validation)
Pros: implements transparent forging, decentralized, consensus is Proof of Stake, it’s cheap
Cons: installation requires deep knowledge, peer communication is slow
Pros: smart contracts, DPoS principle, fast validation process, mining occurs every half-second,
Cons: is close to a centralized platform
Pros: successful and trusted team, high functionality, smart contracts, colossal community, security, culturally and geographically diverse, absolute decentralization
Cons: slow transaction speed, Proof of Work protocol (soon to be changed into PoS)
Pros: public and private blockchain technologies, high security, users have the flexibility to customize the end product, API interface
Cons: not so strong community, just another smart contract platform
Pros: platform for ICO creation, implenets smart contracts, dedicated wallet
Cons: not so strong community
- Hyperledger Fabric
Pros: modular architecture, build permissioned blockchain, fast and detailed transaction process, scalability, rich community support
Cons: lacks the proven case studies, usage requires deep knowledge
Put the Nodes In Place
A node is crucial to a blockchain. It is a device with an internet connection that performs various tasks for blockchain, such as data storage, transaction verification, and processing.
To choose a node, here are the most vital factors to consider:
- The permission structure of the nodes, whether public, private or hybrid.
- Their hosting plan, whether it will be on premise or cloud or both.
- Find out the necessary hardware details like processors, disk size, memory, etc.
- Select an operating system that will be its base. Popular choices include Windows, Debian, Ubuntu, Red Hat, Fedora or CentOS.
Design the Internal Architecture Of The Blockchain
This aspect is very tricky and should be done with utmost care, as mistakes cannot be corrected once the blockchain platform has been activated.
The following should be handled with precision:
- Permissions – Determine who will have access to the data, perform and validate transactions.
- Address Pattern – Decide the appearance of your blockchain addresses.
- Key Patterns – Define the pattern of the keys tasked with generating transaction signatures.
- Issuance of Asset – Put in place governing rules for the creation and listing of asset units.
- Re-issuance Of Asset – Set the rules for the creation of more units of open assets.
- Key Management – Design a system that will keep private keys safe.
- Multi signatures – Establish the number of keys required to validate a transaction on your blockchain.
- Crypto Swaps – Put in place the smart contracts that will facilitate the swap of different digital assets without a third party.
- Parameters – Determine the transaction limits, block mining rewards, maximum block size, etc.
- Native Currency – Establish the regulation of native assets distributed in a blockchain.
- Block signatures – Determine how the participants of the. Blockchain will sign the blocks they created.
- Hand-shaking – Set the rules that will govern the interaction of nodes as they connect to each other.
Pay Attention to APIs
Perform thorough research to ensure your chosen blockchain platform comes with pre-built APIs because some of them do not. In the event the platform has none, there are trusted blockchain API providers you can work with, such as:
- Factom Alpha API
- Coinbase’s API
Create the Interface
Users should be able to communicate well with the platform; therefore, a well-built interface is a must.
Here are some important things to consider:
- External databases
- Front end
- FTP servers, Web and Mail
Legalize Your Cryptocurrency
It’s been long over three years since the governments started noticing cryptocurrency was not following the desired regulations of the financial industry. One thing you need to understand is that countries and their laws differ, so you need to have in-depth knowledge of international and local policies around the cryptocurrency enterprise.
You will need to hire a professional audit (or audit services). For a user to trust the code, they need to be sure that it’s safe and secure. Your journey of figuring out a cryptocurrency will also include figuring out the safety of it.
With this step, you won’t only be providing the users or investors with safety assurance, but you’ll feel safe and trusting yourself. Would you spend your money on creating something so dear to your heart, just to be hacked?
It is an important step that brings legitimacy to your project. These audits are often referred to as ICO security audits, and you can get them from companies like Practical Assurance. Always ensure that the audit company you choose is credible and has a long history.
Getting your ICO verified with a professional audit will help promote your cryptocurrency project. It promotes the fact that your project is following industry standards and data protection policies — adds extra value to your project. It’s a crucial step!
Bitcoin Forks: Another Way of Creating Your Cryptocurrency
From previous content, we can see that creating a cryptocurrency requires a lot of skills and not to mention, time resources.
Did you find yourself hopeless after repeating the importance of knowledge and research of the cryptocurrency industry? It’s not necessary to quit your dream; you can read more about the Bitcoin forks and how they are solutions for your case.
What Does It Mean To Fork A Cryptocurrency?
A blockchain fork is simply a software update. All nodes run the same software, and for them to have access to the shared ledger to verify transactions and protect the network, they all have to run the same software version. This means that, whenever you want to change the parameters of your blockchain or to add new features, you will be required to create a fork.
Types of Forks
There are two types of forks, namely hard fork and soft fork.
Hard forks take place with the involvement of 90% to 95% of the nodes before the software can be updated. After the software update, the system will no longer recognize nodes that are still running the previous version of the software.
On the other hand, soft forks are less tasking. A larger number of the nodes are still needed to update the software, but nodes that do not update will still be recognized and allowed to continue their operation.
Creating a Bitcoin Fork
How it works:
- Engage a Fork Coin Generator
- Handle it by yourself
Bitcoin forks represent the alterations made to the Bitcoin network protocol. The fact that Bitcoin code is open-source has given people who want their own cryptocurrency a chance to tweak it by fixing current imperfections or simply to add new features to achieve their goal.
There are two methods you can use to do a Bitcoin fork. The first one is via a fork coin generator, and the other is by self-help.
Engage a Fork Coin Generator
For those who have little or no idea about programming, ForkGen might be all you’ll ever need. ForkGen is automated, which makes it easy to operate by even those that are less tech-savvy. With it, anyone can come up with a Bitcoin fork by just making changes to Bitcoin’s parameters.
Handle It by Yourself
For those who have a good enough knowledge on programming and want to go it all alone, then the following steps will come in handy:
- Go to Github and download Bitcoin code on your computer.
- Reconfigure the just downloaded Bitcoin code and implement your own customization.
- Publish the code on Github.
- Make available a website and some documentation, which usually is a white paper.
Some of the popular Bitcoin forks that achieved successes include:
- Bitcoin Gold
- Bitcoin Cash
Building a cryptocurrency of your own can be profitable upon completion, but the processes leading up to it is not for the faint-hearted. It requires a lot of programming skills and paying attention to details.
It is advisable to seek professional input if you cannot carry out the task alone because even a minor mistake can ruin the entire project. Also, hiring professional developers will help you save money by eliminating costly errors.
Cryptocurrency is the future of the financial industry, and it will be a step in the right direction to create one for your business in order not to lose it in the future to competitors who embraced cryptocurrency today.
Frequently Asked Questions
How do I legalize my cryptocurrency?
You will need professional help from a local auditor or law firm. A small brush over the international laws and policies won’t do the trick. Invest your time and resources into learning how other countries handle their crypto.
Do I need to use an existing platform for my cryptocurrency?
Yes and no. It depends on your taste and desire. If you want to make it easier and have already chosen a platform that you like, go for it. But If you don’t want to be dependent on any of these platforms, or they don’t offer the functionality you need, you can try to build your own blockchain from scratch.
What else do I need to know after creating my own cryptocurrency?
You need to build a great team and don’t depend solely on yourself. Maintenance may require further coding, teamwork, a network of computers, and investments in sales and marketing if you want your coin to become known and used.
What’s the difference between building a coin versus building a token?
Coins, to put it simply, are digital money (alternative cryptocurrency) that store value over time. You can use them to spend anywhere and use them as a substitute to fiat money (USD, EUR, etc.).
Tokens, on the other hand, can be viewed as a digital asset. It performs exactly like the coin would do, but additionally, gives the holder a right to participate in the network.
While creating a coin, you might be aiming for replacing fiat money, but when you’re concentrated on creating a token, it’s solely for fundraising, help with money and investing opportunities.