In theory, anybody may start a cryptocurrency, but not everyone has the necessary expertise or resources to do so successfully. The work doesn’t end with the creation of a new coin; it has to be advertised, listed on exchanges, and continually improved. Now, after so many years, Bitcoin trading has made its way towards the world’s most trusted online investment platforms.
Understanding Coins v/s Tokens
Before continuing, a token vs. a coin must be distinguished. Cryptocurrencies like Bitcoin and Litecoin operate on the Ethereum network, whereas tokens like BAT run on the Bitcoin network. Tokens are limited in usage as well as restricted to a certain group or organization.
Unlike conventional currency, cryptocurrencies are not regulated. Coin collectors often want to store, accumulate, and move money.
In blockchain-based systems, tokens are often used to represent contracts or other functions. Brave, for example, gives content producers Basic Attention Tokens. Tokens may symbolize digital event tickets and loyalty points. An NFT is a digital piece of art. DeFi tokens may be used for many things in this context.
Ways to Create a Cryptocurrency
None of the three basic methods for creating a cryptocurrency is rapid or simple. Here’s how it works for each of them:
Create a New Blockchain
If you want to create a cryptocurrency from scratch, the most challenging method is to create a new blockchain from scratch. With the help of online tutorials, it is possible to stroll through the process. If you’re going to establish a new blockchain from scratch, you may not have all of the necessary tools.
Fork an Existing Blockchain
The process of constructing a new blockchain from scratch may be more time-consuming and difficult than just forking an existing one. Altering and then issuing a whole new currency would need the open-source code provided on Github. For example, the creators of Litecoin forked from Bitcoin to create it. Forks of Litecoin, such as Garlicoin and Litecoin Cash, have subsequently been developed. This technique still requires the developer’s knowledge of altering the code.
Use an Existing Platform
The third and most straightforward alternative for those apprehensive about coding is to create a new cryptocurrency or passes on an existing platform like Ethereum. A considerable number of new projects utilize ERC-20 to generate tokens.
How to develop a Cryptocurrency in Seven Steps
Step# 1. Decide on a Consensus Mechanism
A consensus method is required to accept a transaction. A transaction can only proceed if all nodes approve it. Getting buy-in is a key component of the process. Finding a way for the nodes to accomplish this is essential.
Bitcoin’s proof-of-work was the first consensus mechanism used. The popular consensus method is Proof-of-Stake. This happens often.
Step# 2. Choose a Blockchain
This is a continuation of the previous three strategies. For a currency or token to exist, it is necessary to decide which blockchain ecosystem it will do so. Your degree of technical expertise, level of comfort, and project objectives will all play a role in your decision.
Step# 3. Create the Nodes
Nodes are required for blockchains and other DLTs to function. Consider your nodes as a coin-producing machine. Is a private or public blockchain better? Know the hardware specs? What will the venue be?
Step# 4. Build the Blockchain Architecture
First, the blockchain and nodes must be faultless. Activating Bitcoin’s main net is irreversible. Pre-testing on a test net is thus expected. Maybe it’s the Bitcoin address format or the IBC protocol integration. The blockchain may then connect to others.
Step# 5. Integrate APIs
APIs are not supported by all systems (APIs). A new cryptocurrency’s popularity may be boosted via the use of APIs. This is where certain blockchain API providers come in.
Step# 6. Design the Interface
Inventing a cryptocurrency that no one can use is a waste of time. Programming on both the front-end and back-end should be done with future updates in mind.
Step# 7. Make the Cryptocurrency Legal
Many ICOs created or marketed in 2017, and 2018 failed to solve this last step. They may not have realized that creating or promoting new money may result in fines or criminal charges. Before starting a new currency, learn about the laws governing securities offerings. Due to the problems’ complexity and frequent revisions, you may want to hire a lawyer for this phase.