Think that cryptocurrencies are created by the world’s most advanced IT companies only? You will be surprised to find out that some popular coins have been created by usual people, and you can even make your own crypto! How? Find out how to create cryptocurrency: this guide will explain a few crucial aspects.
What’s a cryptocurrency and who creates it?
Cryptocurrency is an encrypted unregulated digital asset that can be used for transactions and purchases. Cryptocurrency does not exist in a physical form – it is only available in the form of data. An exchange with a cryptocurrency is an online operation, so no intermediary (bank) is required, and the fees are minimal. All cryptocurrency operations are registered in so-called ‘blockchains’.
Each coin is based on a program code, or blockchain. It defines technical specifications and network operation parameters. So when you create crypto coin, you can either write the code from scratch or take the source code of Bitcoin or another altcoin, and remake it.
The first option is the most difficult one: revolutionarily new cryptocurrencies are created by teams of experienced developers who have a pretty huge budget and are ready to spend from a few months to several years on cryptocurrency production.
The second option means creating a fork of a particular digital coin. In this case, developers perform the correction of critical errors and add some new functionality. For example, there are more than 50 forks of Bitcoin on the market today, and the most famous coins are Bitcoin Cash, Bitcoin Gold, and Bitcoin Diamond.
In any case, you will need to know the basics of coding and blockchain development, or hire some tech-savvy guys who can do it for you.
Coin or Token?
What is the difference between coins and tokens? It’s all about the way they are created. Crypto tokens are created on the basis of some blockchain. The blockchain that underlies the coin functions on its own. Blockchain serves to confirm all transactions, ensure the reliability of the coin, and render the coin some value.
Tokens are not created on the basis of their own independent blockchains. Instead, they are introduced on an existing platform. Sometimes a token transforms into an independent coin. When this happens, the token creator launches a new blockchain. But until that moment, the token functions on the basis of an existing blockchain.
Thus, you cannot create a token until you have a platform that it might be useful for. That leads us to the next question – choice of blockchain.
Pick a Blockchain Platform
The most widely used blockchain platforms used to create cryptocurrency online are Ethereum, NEO, NEM, Ripple or Waves. Aside from them, special websites and resources can be used to create your own cryptocurrency.
- GitHub.com is the largest web service for hosting IT projects and their joint development. There, you can choose the right code and find the right software, for example, the Open-Transactions software package, which allows you to create digital coins.
- Ethereum is a blockchain platform on which the majority of tokens for projects that have been released on ICO are created. This is the most famous and functional blockchain platform with a developed infrastructure for creating smart contracts and decentralized applications. The main programming language is Solidity.
- The World Exchange is a platform created by the Ripple team. The service allows you to not only replenish your wallet and manage XRP coins, but also create your own tokens.
- Exonum is another open source framework for building blockchain-based applications.
- WAVES is a Russian blockchain platform for the development of digital coins that do not comply with the ERC20 standard.
- Cardano – the current blockchain platform of a new type; The key difference from other platforms is that Cardano has a separation of computing layers: the first layer is designed to work with the ADA internal cryptocurrency, the second one is for creating and processing smart contracts written in the Haskell programming language.
Typically, such services contain only the blockchain structure and its basic modules, and developers add all additional components on their own. The advantages of frameworks are that they allow you to use ready-made developments for free. Unlike regular platforms for creating digital tokens, frameworks allow you to not overload the project with unnecessary functionality.
The choice of platform depends on the complexity and purpose of the project. If you want to create a decentralized application, consider using Ethereum platform.
Choose Consensus Model
An encryption algorithm or a hashing algorithm (cryptocurrency algorithm) is a set of specific cryptographic mechanisms and rules that encrypt a digital currency.The process of decryption (coin mining) turns a set of random data into ordered, systematic information, which is subsequently recorded on the blockchain.
Today, there are several dozen cryptocurrency algorithms, however, only a few of them are popular. Among the most popular ones are the following: SHA-256, EtHash, Scrypt, X11, CryptoNight, EquiHash, X13, Quark, NeoScrypt.
The choice of consensus model mostly depends on the type of blockchain you plan to work with.
Blockchain Network Design
When you’ve decided on the technological aspects, it’s time to pay attention to design. When you create new cryptocurrency, plan ahead the following:
- Structure the nodes. You need to choose the activities and usefulness of your blockchain and structure the nodes likewise. For example, will the permissions be private or open? What kind of hosting will you leverage? What might be the necessary hardware requirements for the execution?
- Build up blockchain’s internal infrastructure. Think over every aspect of the blockchain architecture before the blockchain is up and running. For example, you should decide on the address format that your blockchain will follow while providing the exchange between crypto assets without intermediaries.
- Incorporate APIs. Not all platforms come with a pre-built API, so make sure you have one at your disposal. Anyway, you can try some third party API providers like ChromaWay, Gem, Colu, Bitcore, BlockCypher, and Tierion.
- Design the interface. You cannot create a world-class cryptocurrency if the interface is bad. You need to ensure that you use the last versions of the web, FTP servers, and external databases, and both front-end and back-end writing computer programs are programming is done with the latest practices.
Advanced: Make your cryptocurrency legal
Make sure that your cryptocurrency complies with the international laws and cryptocurrency regulations. This way, you will avoid negative surprises and problems. To make the process flawless, hire a cryptocurrency-savvy lawyer – it will save you from serious mistakes.
Benefits of creating a cryptocurrency
So, why create your own cryptocurrency? There are at least three reasons to consider creating your own crypto:
- Convenience and excellent speed of financial transactions. When it comes to purchases in the Internet, it is more convenient to use cryptocurrency than a plastic card. When shopping on foreign sites, the user pays for the package in a dollar account from an electronic wallet. For various reasons, a transaction may fail. With cryptocurrency, the risk of errors is minimal, and the payment almost instantly reaches the destination. By introducing cryptocurrency, you enable quick payments without intermediaries and commissions.
- Simplify your business processes. If you have a business, then you just need cryptocurrency to systematize the process. The internal token will help you increase profits. Like any loyalty program, digital currency systematizes and simplifies the entire production process. Clients will pay for services with tokens, which, unlike ordinary bonuses, will not lose their value and retain the original programmed rules for their application.
- Enjoy passive income. If the community likes your cryptocurrency, it can become a tool for passive earnings. If the coin is backed up by the stock reserve, it can be exchanged for Bitcoin, which is easier to cash out.
Hard fork as an alternative of creating a new crypto
We have already discussed what cryptocurrency fork is. In some cases, forks become even more popular and technologically advanced than their parent cryptocurrencies. What’s the point of forking a crypto?
- You can use ready blockchain and open-source code, which simplifies the task.
- You like the blockchain of some certain cryptocurrency, but want to improve it and know how it can be done.
- You don’t have enough money or technical facilities/knowledge to create a cryptocurrency from a scratch.
How to fork a cryptocurrency?
On the aforementioned GitHub, you can find many cryptocurrency projects, since most of them are open source. If you choose forking, we recommend working with some popular cryptocurrency.
- On the project page, click on the download button and save the archive with the files to your computer.
- Now you need to work with the files. All of them contain the name of the cryptocurrency in different formats. The name can be found in abbreviated form or not, both with a capital letter and with a small one. There are usually a lot of such references, and replacing them all manually will be extremely problematic. To solve this problem, you can use special software that allows you to change the name of the cryptocurrency to yours.
- The next step is to reconfigure all network ports and addresses. If you don’t have any technical knowledge, it might be problematic. Network ports will be used by the node for various operations within the network. Usually, four ports are used: two for the main and two for the test network. It should be remembered that ports can be used only by one application, so you need to choose free ones. All files that contain port information must be edited accordingly.
- You can also edit the algorithm for generating new coins. The block reward can be changed, its generation time is increased or decreased, and emission can be limited. Moreover, you can even limit the number of blocks to be mined per day.
- The last but not the least is editing of graphics. You will need to replace all the icons, images, and so on. Once it’s done, the creation of the simplest fork can be considered completed.
Successful Fork Cases
Some cryptocurrency forks appeared to be pretty successful. For example, Bitcoin Cash and Ethereum Classic have made it to the top-50 cryptocurrencies and gained a pretty high market capitalization.
Ethereum is also preparing for the next hard fork, and it is expected to become a new hit.
Creating your own decentralized digital currency is not as difficult as it might seem at first glance. A lot of tools are already offered on the Internet that allow you to do this with minimal investment and do not require too deep technical knowledge. Of course, cryptocurrencies created in this way are unlikely to attract a large audience and become major players in the market. However, they provide invaluable experience to their developers and contribute to learning. In addition, such home-made projects can be used in small communities or projects that require an internal settlement system.