Unless you plan on relocating to the Amazon Jungle to live with one of the few groups of humans that have not been contacted by the outside world then blockchain technologies such as the cryptocurrency are about to change your life.
In this article, I aim to give a brief overview of the rise of the cryptocurrency before outlining why it is so important that we develop new and appealing cryptocurrencies. I will then outline the process regarding how to create your own cryptocurrency to help give readers a good understanding of the challenges and rewards that such a project can entail.
List of the topics I will cover:
The rise of bitcoin and the cryptocurrency
Why we need a healthy choice of cryptocurrencies
Creating your own cryptocurrency – pros and cons
How to create your own cryptocurrency
Storage”>My final thoughts
The rise of bitcoin and the cryptocurrency
“With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transaction effortless.” – Satoshi Nakamoto
Were it not for one particular use of blockchain tehnology the current blockchain revolution would most likely have gone unnoticed by the majority of people outside the tech industry. This use was, of course, the cryptocurrency. Bitcoin was first developed back in 2009 by the enigmatic Satoshi Nakamoto. It was the very first decentralized ledger currency and is today, the world’s biggest and best-known cryptocurrency.
The reason for this is not only that Bitcoin came first, but also the fact that there is a limit to the number of bitcoins that can be created. This effectively made bitcoin into what has been termed ‘digital gold’. While some early investors such as the Winklevoss twins bought millions of dollars of bitcoins, it wasn’t until 2017 that the currency really took off. Its meteoric rise led to it becoming a regular feature in mainstream news sites such as CNN and the BBC, something that created enormous worldwide interest.
As a result, more and more people who had little to no knowledge whatsoever of cryptocurrencies flocked to buy bitcoin. So great was the influx that between October and November 2017, the price of a single coin rose from around $5,500 to over $10,000. With a market capitalization of nearly $300 billion, no one knows just how far bitcoin will one day rise. This has fueled an online gold rush as more and more people look to buy bitcoin to get in on the action.
Today, it is estimated that of the more than 150 million bitcoin holders, roughly 70% are individuals with $1,500 or less worth of bitcoin. And it is not just bitcoin. There are around 1,300 different cryptocurrencies in existence today, at least 30 of which have a substantial market capitalization.
It is clear to anyone who has their head screwed on right that cryptocurrencies are here to stay. But why with so many different currencies available, why would anyone think about creating a new cryptocurrency?
Why we need a healthy choice of cryptocurrencies
Take a look at this list of the most popular cryptocurrencies and you will immediately see that each one has its own unique selling point. The reason for so many different cryptocurrencies is not just that this is a new technology, but simply that there is a market for them.
Now, while no one expects all of these 1,300 current cryptocurrencies to succeed, it certainly makes sense that the overall number is set to multiply dramatically over the next few years. When most people think of cryptocurrencies, they think of Bitcoin, a global currency that allows an individual to send money to someone else anywhere in the world.
While it is true that a small number of cryptocurrencies are set to be used for the majority of worldwide transactions someday, there is also the need for smaller cryptocurrencies that have unique features make them more useful for specific purposes.
Take, for example, the main drawback to using Bitcoin as a digital currency. Slow transaction times along with ever-increasing fees that actually make it more expensive than some of the traditional methods of payment make it less suitable as a high volume digital currency than many of its rivals.
In the early days of Bitcoin, transaction speeds were relatively quick, but as the complexity of the processing tasks required to process transactions increased, so did processing times.
To take advantage of this, scores of new cryptocurrencies emerged, including the popular Dash, which cut down processing times significantly. There has been a multitude of other cryptocurrencies that have emerged to take advantage of a unique need within the digital currency marketplace.
Examples of some of the unique features targeted by new cryptocurrencies:
- Ethereum – Supports Smart Contracts
- Waves Platform – Allows digital token creation and for quick transactions
- Peercoin – First cryptocurrency to use POW and POS functions
- PotCoin – Allows users to buy legal cannabis
- Estcoin – State-backed cryptocurrency to rival bitcoin
Without question, there is still enormous potential when it comes to starting new cryptocurrencies. The question really is how can companies or individuals create their own cryptocurrency that is unique enough to make it a success?
Creating your own cryptocurrency – pros and cons
With so much money to be made by simply investing in cryptocurrencies such as bitcoin, ethereum, litecoin, and ripple, why would anyone spend their time trying to start a new cryptocurrency that has no guarantee of success?
Well, two main factors seem to motivate people to create their own cryptocurrency – potential financial rewards and the desire to create a successful cryptocurrency that furnishes a much-needed market.
The creators of the Ethereum project provide a good example of what it takes to succeed in the cryptocurrency market. All the individuals involved are driven by the desire to transform the world for the better and not just riches.
During the recent cryptocurrency surge where many startups were issuing ICO’s, Vitalik Buterin (Ethereum creator) warned that the market was in a bubble, something that would inevitably have a negative impact on the price of his own ethereum currency.
While one could argue that his warning would serve to prevent a larger collapse that would hit his project harder in the long term, what this warning really highlights is his passion to create a healthy environment where cryptocurrencies can thrive rather than to simply get rich quick.
Pros of creating your own cryptocurrency
- Control – The great thing about being the developer is that you can control the direction that the currency evolves. The main benefit of this is that it helps prevent the kind of developer infighting that has caused such dramatic declines in the price of bitcoin and resulted in the recent bitcoin cash split.
- Filling a gap in the market – If you have spotted a gap in the market and can create a cryptocurrency to exploit it then success surely awaits you.
- Gaining prestige in the tech community – When rumors of Ethereum project founder Vitalik Buterin’s death emerged, the price of cryptocurrencies everywhere plummeted. Though such a profound level of respect within the industry is hard to come by, being the founder of a successful cryptocurrency comes with enormous rewards. Whether it creates massive business opportunities or enables you to demand 5 figure sums to give lectures on cryptocurrencies etc., huge lifelong rewards lie in success.
Cons of creating your own cryptocurrency
- Extremely competitive market – With over 1,300 different cryptocurrencies already in existence, getting yours noticed will be a real challenge
- Might not yield the kind of financial rewards most that developers think it will
- Requires full-time development which can be a lot for any small team
How to create your own cryptocurrency
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 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 they are going to need in a 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 that includes a split that resulted in Bitcoin Cash last year.
As Feathercoin found 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 enlist the help of at least one expert blockchain developer. For those startups on a tight budget, sites like Upwork allow access to 1,000’s of skilled freelancers who will have the skills to help you.
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 you desire. Then launch it under the name of your new currency. Keep in mind that the 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. For those developers who have identified a unique feature that will set their currency apart from the rest, they 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 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 traveled 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.
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 Steve Job’s Apple aproduct 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.
My Final Thought
Rather than being a step by step tutorial on how to create your own cryptocurrency, this guide was intended to give an overview of the challenges and rewards of doing so. Cryptocurrency development is a long-term project that needs to be fueled by passion rather than the desire for a quick buck.
If you are just trying to make a quick profit then my best advice to just invest in ethereum, bitcoin or one of the many other altcoins that are currently surging in value. For those of you with the passion and expertise to create a new cryptocurrency, provided you adhere to the advice given in this article and never let small failures get in the way of your vision for success, huge rewards await your hard work.
Latest posts by Aran Davies (see all)
- How to Build a Crypto Trading Bot - March 14, 2018
- How to Integrate a Blockchain Technology into Your Project - March 13, 2018
- How to Secure the Internet of Things (IoT) with Blockchain - March 12, 2018