How to Create Cryptocurrency like Bitcoin?
Most readers would be surprised to learn that they can create their own cryptocurrency in less than an hour. I will explain how this can be done next. After, I cover a few extremely important aspects of creating your own cryptocurrency.
Part 1: Identifying and understanding your target audience
The idea that anyone can create their own cryptocurrency might be nice but it also means that the world may end up buried up to its neck in digital currencies one day. The fact that every country in the world has its own currency and other forms of ‘monetary exchange’ such as gold etc. shows that the world prefers lots of choices when it comes to wealth transfer.
While there is an obvious need for new and unique currencies, it is shortsighted to just assume that yours will be the one to succeed. To help you head in the right direction, before getting anywhere near the coding side of things, you should have already identified your target market and therefore understand exactly what features are going to needed in your cryptocurrency.
For example, if you are designing your currency for day-to-day transactions like paying for food from the market or for a local bus ticket, then more than likely, vendors are going to desire fast and cheap transactions. A cryptocurrency like Bitcoin, with its high transaction costs and slow processing times, is not going to be appropriate for such a task in its current form.
If on the other hand, you are creating a currency that you wish to store wealth and therefore gain in value, it is best to introduce a limitation on the total number of coins as this will spur investment.
Try to build a community to help develop your cryptocurrency
While enlisting the help of fellow cryptocurrency enthusiasts to help you develop your project might seem like a risk at first, it actually has a huge number of benefits that far outweigh the negatives in the longer term.
Projects such as Feathercoin, which was designed to encourage community involvement in cryptocurrency development, have been enormously successful.
Thanks to a growing pool of passionate developers, Feathercoin has improved both its security and functionality, something which has helped the currency’s reputation enormously. Remember, we are talking about people’s money here, so security and dependability are extremely important.
Be prepared to have to work extremely hard
If you are looking to create a cryptocurrency simply to make some easy money then forget it. It will take time to get your currency off the ground while the project itself will require constant development as it goes along. Believe it or not, creating the currency itself is relatively easy; it’s the marketing and development side that will really be demanding.
Don’t believe me? Well, just think that Bitcoin was actually released back in 2009, and it wasn’t until last year that most people started to show interest in it. Since its inception, Bitcoin has undergone huge amounts of development.
As Feathercoin founder Chris Ellis once said, “You have a duty of care at the development end in terms of bug fixing and ensuring the promise made at launch but you also have a duty to educate people of the risks and give them what they need to secure their wealth.”
Getting down to coding
While it is theoretically possible for someone with very little understanding of code to start their own cryptocurrency, without a deep understanding of blockchain technology, essential development of the project is going to be impossible.
It is therefore vital to the long-term success of the project that you hire blockchain developers highly-skilled in this field.
Alternatively, as I have already mentioned, your startup can seek to build a development community of passionate individuals who will have all the drive and expertise to ensure your project stands the best chance of becoming a success.
Now that you have the required expertise in your team, you can get down to actually creating your very own cryptocurrency.
Bitcoin Folk: Make your own cryptocurrency in less than an hour
The easiest way to create your own cryptocurrency is to create what is known as a ‘bitcoin fork’. In a nutshell, this involves downloading the open-source code that is used by Bitcoin to use as the basis for your new currency.
Since many of the other altcoins are open source, you can use one of these as the basis for your currency should one be more suitable than the rest. One such example is Ethereum, which you can find more details about by clicking this link.
Regardless of which open-source digital currency you choose, the process is the same.
Download the open-source code and then modify it to add any new features that you desire. Then launch it under the name of your new currency. Keep in mind that it will initially be exactly the same as the source currency unless you modify it. Even if you don’t, they will begin to diverge the moment you start to develop it.
The huge benefit to this method is the amount of time and money individuals and companies can save. Those developers who have identified a unique feature that will set their currency apart from the rest only need to have their team create the code for this specific portion rather than coding the whole currency from scratch.
Creating a completely new blockchain from scratch
In order to create an entirely new blockchain from scratch, you will need a great deal of understanding about blockchain technology and encryption. While this approach is certainly a lot more time consuming, it does allow you and your company to retain full control over the underlying code.
The biggest advantage is that this approach allows you to create new and interesting features from scratch while being able to define all aspects of how your new digital currency will work. Also, you might find that trying to adapt an existing currency’s open-source code to incorporate all the various changes you might wish to make is too difficult and time-consuming. Writing the complete code from scratch will make this easier.
One of the biggest advantages this method holds is allowing you full control over the block size and also the total number of coins your currency will have. These are two of the key points that most developers wish to control themselves.
If this is your first time to build your own altcoin then it is definitely recommended that you employ at least one blockchain expert who has created one in the past. Alternatively, you could outsource the work to a professional cryptocurrency creation service such as DevTeamSpace.com. Hiring such a team will help to get your currency up and ready more quickly and also ensure it is built on the best code available.
OK, now you have created your own altcoin, what’s next?
There are several key steps that remain after you have launched your new digital currency.
All cryptocurrencies require miners to process the transactions. Depending on the complexity of the calculations, miners usually receive a sum of money in the form of the cryptocurrency they are mining. For more on cryptocurrency mining, you can read this article.
Finding miners to agree to mine your new currency is quite an enormous challenge. It requires a lot of industry knowledge and a great deal of salesmanship. You will need to approach miners through the various communities they operate in as well as through any other forums/chat rooms/sites that they frequent.
You will need to be able to sell your new altcoin to them in a way that makes it stand out. Since the original value of your currency will be zero, your sell should include how you intend to get the currency noticed and what rewards/incentive they will get for mining it. You will need to decide whether you are going to pay your miners after proof of work or through proof of stake rewards.
An important tip to remember is to never oversell the expectations of your project. If you promise miners the earth and fail to deliver, they will almost certainly distrust your future ambitions and abandon your project. Remember, there are plenty more juicy cryptocurrencies out there for them to mine.
Sign up merchants
Anyone who has ever owned an American Express card and travelled abroad will know just how frustrating it can be to have a payment system that you can’t seem to use anywhere. Cryptocurrencies face the same challenge. Without merchants who are willing to exchange goods and services for your new altcoin, few people will be interested in using it.
A combination of vision, good product knowledge, and of course confidence is essential if you are going to be successful in signing up merchants. This is quite possibly the most challenging aspect of starting a new cryptocurrency.
The only way to succeed in this is to engage in targeted marketing. You should already have a good understanding of your target audience given that you have just created a new altcoin around their needs. Now you need to exploit this and get the message out to them to let them know a new coin is in town that has been created specifically to suit their needs.
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Hit the forums, social media sites, and even roadshows to spread the news wherever you can. If you are unsure of how to sell your product then I definitely recommend watching a few of Steve Job’s Apple product launches to see a master at work. Ever notice how every new tech product these days seems to have a Steve Jobs informal style presentation? Well, that’s because that guy knew how to sell an idea to people.
Key considerations when creating your crypto coin
Keep the following important considerations in mind when your own cryptocurrency:
1. Do you need your own coin at all?
Does your use case need a token? Will you have viable token economics? Can you offer your products and services for fiat currencies? Ask yourselves these questions.
Not all blockchain use cases require a cryptographic token. Take a look at important use cases for enterprise blockchains. E.g., different companies use blockchain for supply chain assurance. They manage with an enterprise blockchain, and they don’t use crypto tokens. Enterprise blockchains typically require permissions. They aren’t open to everyone. Analyze your use case thoroughly.
2. Do you need your own blockchain?
This question boils down to whether you need a cryptocurrency or a cryptographic token. Some people might use these terms interchangeably. However, a cryptocurrency differs from a cryptographic token, conceptually speaking.
Of course, you create a cryptocurrency and a cryptographic token by following established cryptographic standards. You use one or more standard cryptographic algorithms to create them.
However, there are important differences between them. You need your blockchain to create a cryptocurrency. Take a look at the cryptocurrency market. Important cryptocurrencies like Bitcoin (BTC), Ether (ETH), Ripple (XRP), etc. have their own blockchain.
Remember that creating a new blockchain means much more than creating just the blockchain network. You need to build an ecosystem of tools. These tools should have easy-to-use user interfaces, and beginners should be able to use them.
You need to work with different technology providers. These include working with API providers for different services. You need to manage upgrades proactively. In summary, building a new blockchain involves hard work!
On the other hand, you can create a cryptographic token using an existing blockchain. Many entrepreneurs have launched their ICOs (Initial Coin Offerings) using the Ethereum blockchain platform.
Payment should be one of the important use cases of cryptocurrencies. On the other hand, a cryptographic token offers access to specific products/services/platforms. This is the other key difference between cryptocurrencies and cryptographic tokens. Analyze your use case carefully to decide whether you need a new blockchain.
3. Which blockchain platform can you use for creating a cryptographic token?
You can use one of the well-known public blockchain platforms if you need to create a cryptographic token. Consider the following options:
The Ethereum blockchain platform offers many advantages, e.g.:
It provides well-known standards for cryptographic tokens. Many developers use the ERC-20 standard to create regular cryptographic tokens. Many of the digital assets that you see on exchanges like Binance belong to this category. The Coinmarketcap.com website lists many such ERC-20 tokens. Some entrepreneurs use the ERC-721 standard to create NFTs (Non-Fungible Tokens). NFTs help to tokenize digital collectibles and artworks.
Your development team will need to use Solidity, a powerful programming language to code smart contracts. The language offers many useful features.
Ethereum uses the “Proof of Work” consensus mechanism. It’s computing and energy-intensive. It adversely impacts the scalability of Ethereum, and you need to implement additional scaling solutions.
In summary, the Ethereum blockchain platform is popular. A lot of times, your business needs might require a more efficient blockchain platform.
NEO is a relatively new blockchain development platform. It offers the following advantages:
- It uses the DBFT (Democratic Byzantine Fault Tolerance) consensus mechanism. This consensus algorithm offers scalability and performance.
- NEO has relevant token standards.
- It offers a useful ecosystem of development tools.
- You can code smart contracts in popular programming languages like Java, Python, C#, Golang, and TypeScript.
NEO hasn’t yet attained the stature and popularity of Ethereum.
Frequently Asked Questions
Can I create my own Cryptocurrency?
More than 1,500 cryptocurrencies have been created to date. During the high point of ‘crypto-mania’ tens of different new coins were being created each week. It is possible for anyone to create their own cryptocurrency provided they have sufficient knowledge. However, getting people to buy your coins is another matter.
How much does it cost to create your own Cryptocurrency?
Due to the need to create the software as well as to write and launch a White paper, most cryptocurrencies cost somewhere in the region of $6,000 to $10,000 to launch.
How long does it take to create a Cryptocurrency?
If you plan to use another currency as a base then it can take just a few weeks to create your won cryptocurrency. However, if you plan to create one from scratch, then you are looking at anywhere from 1 to 6 months, depending on the complexity.