How to Create Cryptocurrency – Crypto Currencies has become a buzz word in the recent years, and it has gained a lot of popularity. The reason behind its popularity is that it allows users to make payments through a secured network. There are many currencies available but the most popular ones are Bitcoin, Litecoin and Ethereum. In this article you will learn how to create your own cryptocurrency. I will teach you step by step guide to create your own crypto currency which you can use for online transactions for free.
Table of Contents
What It Is A Cryptocurrency? Basic Definition
First of all for let’s go back to basics. What is a currency?
Let’s take a step back and refresh in memory a definition of a currency first. While we tend to think about currencies in terms of banknotes and coins or dollars and euros, a currency is a unit of storage and account and a means of exсhаnge, i.e. a universally accepted way to obtain goods and services as well as to store and distribute wealth.
Now, a cryptocurrency can be defined as a digital currency relying on encryption to generate new units and confirm the transactions. It has all the functions of the currency with the difference of running outside of a single centralized platform (such as a bank).
Cryptocurrencies don’t have banknotes but they do have coins, which are often confused with tokens. So what exactly is the difference between them? Simply put, it all comes down to these three points:
Coins require their own blockchain while tokens can operate on the existing ones.Tokens are limited to a specific project; coins can be used anywhere.Coins buy tokens but tokens can’t buy coins.
If you want to put tokens and coins in a real-life context, think about tokens as your Frequent Flyer Miles while coins are actual money: you can use both to get an airplane ticket, but with the miles your choice will be limited to the air company that issued them, while with the money you can take your business anywhere you want.
The bottomline is that you need to build a blockchain if you want to create a crypto coin.
Now, What is Cryptocurrency?
It is just like a normal currency but in a digital platform and accepted universally unlike physical currencies that work only in a specific country. A single centralized platform does not bind cryptocurrencies.
What It Is A Cryptocurrency? Advance Description
Cryptocurrencies don’t have banknotes, but they do have coins. There is also one more term, Token in cryptocurrencies. People often get confused between a token and a coin.
So What exactly is the difference between a Token and a Coin in Cryptocurrency?
The three main differences are:
- Coins are part of a single blockchain while tokens operate on the existing blockchains.
- Tokens are limited to a specific industry or community; coins can be used anywhere.
- Coins can buy tokens, but tokens can’t buy coins.
Let’s simplify using a real-life scenario. If you go to Starbucks regularly, then you may earn loyalty points for your frequent purchases. With these points, you can redeem a drink. These loyalty points are token that an establishment (in this case Starbucks) offers.
Now you can buy such loyalty points by giving money which in turn gives you free coffee. This money is the coin (in this case a real-life coin or bank note).
You can buy loyalty points using coins, but you can not get real money using loyalty points. So a crypto coin can be used to buy a business’s token, but you can’t buy a crypto coin using a token.
Starting a New Cryptocurrency: Is It Right for Your Business?
Now you have a fairly good idea what a cryptocurrency is and how it is used. Now comes the question, does your business actually need cryptocurrency? Just answer the questions below, and you will get a clear picture:
- Will your business be on the internet?
- Does your revenue come more from digital payments than hard cash?
- Will an online payment option increase your userbase?
- Do you plan to stay in business for more than a couple of years?
Okay, the last question was a rhetorical one. If the answer to all these questions is “yes” then your business needs a integrate cryptocurrency.
Benefits of having your own cryptocurrency
In some cases it’s a no-brainer: if your project or startup requires its own blockchain, you need to create your own digital currency to incentivize the nodes contributing their processing power. One more word on blockchains here: many authoritative business analysts foresee a big future and a growing list of the markets and industries where the blockchain technology will significantly disrupt the status quo and generously reward the early adopters. The good news is that for many fields the blockchain technology has never truly arrived yet so it’s not too late to join the ranks of pioneers.
The other important aspect is that when you decide to start a cryptocurrency you get a whole set of powerful marketing tools and consumer benefits which will help you differentiate yourself from the competition.
Here is a list of the most significant advantages:
Eliminating fraud risks — cryptocurrency is impossible to counterfeit and no party can reverse past transactions.
Providing transaction anonymity — customers decide what exactly they want sellers to know about them.
Cutting down operating costs — cryptocurrency is free from the exchange or interest rates, as well as the transaction charges.
Offering immediate transactions — state holidays, business hours or geographic location of the parties don’t affect cryptocurrency.
Ensuring an immediate pool of potential customers — now you can make business with those without an access to traditional exchange resources. No more trade restrictions in any markets.
Providing security for their funds — since cryptocurrency is a decentralized system, there is no Big Brother figure like banks or government institution that can seize or freeze your assets.
How To Create Cryptocurrency?
I believe now you are ready to create your own cryptocurrency. Without wasting any time let’s get straight to the step-by-step process to create and launch your own cryptocurrency.
Step 1. Choose a Consensus Mechanism
Consensus mechanisms are the protocols that consider a particular transaction legitimate and add to the block.
Step 2. Pick a Blockchain Platform.
The correct choice of blockchain platform for your business depends on the consensus mechanism you’ve selected. (I’ll mention the top blockchain platforms below for you to choose from)
Step 3. Design The Nodes
You have to decide the workings and functionality of your blockchain and design the nodes accordingly. For instance, will the permissions be private or public? The hosting will be on the cloud or on-premises, or both? What would be the required hardware details for the execution?
Step 4. Establish Blockchain’s Internal Architecture
Be sure about all the aspects before the launch as you won’t be able to change several parameters of the blockchain after it’s launched and running. The decisions could be as simple as what address format your blockchain will follow to providing exchanges between different cryptocurrencies without a 3rd party intermediary.
Step 5. Integrate APIs
Some platforms don’t provide pre-built APIs so make sure yours does. If it doesn’t still no need to worry, there are several 3rd party blockchain API providers like ChromaWay, Gem, Colu, Bitcore, BlockCypher, and Tierion.
Step 6: Design The Interface
Building a world-class cryptocurrency is of no use if your interface is not good. You need to make sure that the web, FTP servers, and external databases are of most recent and the front-end and back-end programming is done with the future upgrades in mind.
Step 7. Make Your Cryptocurrency Legal
Make sure that your cryptocurrency is prepared and abiding by the soon to become laws of international cryptocurrency regulations. This way your work is preserved and no sudden surprises can ruin your efforts in creating a new cryptocurrency.
Top Blockchain Platforms of The World:
- Ethereum (Market Leader With 82.70% Shareholding)
- Waves (WAVES)
- Hyperledger Fabric
- NEM
- IBM blockchain
- Nxt (NXT)
- HydraChain
- BlockStarter
- BigChainDB
- EOS
- Quorum
- IOTA
- CoinList
- MultiChain
- Openchain
- Chain Core
Conclusion
Creating a cryptocurrency can take a lot of time and money, and there’s a high risk that it will not succeed. There are more than 5,000 different types of cryptocurrencies listed on public exchanges according to data from Coinmarketcap, and thousands more that have failed over the years.
Simply investing in cryptocurrency might be a better route for those who don’t have the time, money, or interest in creating their own.