If you’re looking to make a mark on the world and create the next big cryptocurrency, you’re at the right place. In this article you will learn tips you should know about creating your own cryptocurrency, and why you might want to do this.
What Is a Cryptocurrency?
Before we dive into how to create your own cryptocurrency, let's first establish what a cryptocurrency really is. A cryptocurrency is essentially a digital or virtual (online-simply put) currency that uses cryptography (techniques for making something secure, like a code or cipher) to secure its transactions and control the creation of new units.
Cryptocurrencies are unique in that they are decentralized, meaning they are not subject to government or financial institution controls. This makes them attractive to people who dislike the control of authorities, as well as to those who believe in the power of free-market capitalism.
Why Create Your Own Cryptocurrency?
There are a few reasons you might want to create your own cryptocurrency. In the infancy of the crypto era, people typically tried to create a better and more efficient Bitcoin alternative. However, it became clear by now that doing so won’t make new currency to overtake Bitcoin, since it’s community size and brand that makes a real difference. And trying to beat Bitcoin community with a new coin is basically inconceivable.
Therefore, even since the ICO frenzy in 2017, creating your own cryptocurrency has been typically tied to the need to finance the project. Of course, you can go pursue a bank loan or venture capital, but it might be an extremely time-consuming effort with questionable results. On the other hand, you can create a cryptocurrency and sell it to the future users of your product via a dedicated broker/exchange or even your own interface. However, in this case, it’s imperative to understand if the token/coin you’re selling is a utility or security token. In the case of securities, it’s necessary to follow often very stringent rules in order not to end up busted by a securities watchdog hungry for blood.
While it hasn’t really proved viable to compete with Bitcoin on the front of payment/store of value tokens, the industry has been much more attentive to the teams who decided to build so-called Ethereum killers. If you were to create your own crypto platform aimed at supporting Dapps via a smart contract ecosystem, you might be in for hefty earnings. If you are able to create your own cryptocurrency that will be used as a native payment method on the new network, the value of the cryptocurrency will likely correlate with the success of your project.
Another reason to create your own cryptocurrency we should touch upon is when you are planning on building a blockchain-based platform. Often, crypto projects tend to introduce an underlying currency that serves the purpose of increasing engagement from the community members. They do so by offering extra incentives in the form of the created cryptocurrency that motivate users to become more active customers. A good example of this behavior would be yield farming offered by various DeFi protocols.
Whatever your reasons, it’s important to remember that cryptocurrencies are still a relatively new technology and can be volatile. If you decide to create your own cryptocurrency, please be sure to do your homework and heed all of the warnings in this article.
How to Create Your Own Cryptocurrency?
There are multiple ways how to create a cryptocurrency. Depending on your motivation behind creating a new cryptocurrency, you need to weigh all the pros and cons of either creating cryptocurrency from scratch or piggy-backing off an existing platform/codebase. There are many examples of forked blockchains taking advantage of existing open-source projects, or even so-called vampire attacks (Sushiswap vs. Uniswap), where a new platform completely copies the existing project with a single difference in tokenomics. For the majority of the projects, the most reasonable approach is to work with existing modules that will significantly streamline the creation of your new crypto while making it unique and “yours”. Your own cryptocurrency will be easy to develop and pre-programmed to act in a certain way if you were to use platforms that employ 1-click token creation solutions.
How to Create a Cryptocurrency Using Cryptography?
If you are to create your own cryptocurrency on the blockchain, you will inevitably use cryptography to secure your cryptocurrency. Cryptography is the practice of securing communications and data using codes and is used by blockchains by design. Hence, be it Ethereum, Solana, Cardano, or any other blockchain, you will create your own cryptocurrency with cryptography being an essential part of securing your crypto and all its transactions.
What Cryptography Basics Should I Know Before Creating My Coin?
First, let's take a look at how encryption works. Encryption is the process of transforming readable information into an unreadable format. Data that is encrypted can only be accessed by those who know the secret code.
In order to decrypt the data, you need to use a key (a unique set of instructions) that has been supplied by the sender or recipient. Without a key, your attempts at decoding the data will be in vain.
One important use case of cryptography is that it is used to secure transactions and data on a blockchain. When you create a cryptocurrency, you are inherently securing it with cryptography. A blockchain is a decentralised database that records all of the transactions made using cryptocurrencies. Transactions are added to the blockchain in "blocks" and once a block has been verified by network nodes, it becomes part of the permanent record of this particular cryptocurrency's history.
This process provides an important layer of security and transparency for digital currencies. Transactions are visible to the public and can be verified by anyone using an internet connection. However, because blockchain is a decentralized network, it is difficult to tamper with or corrupt data.
How hard is it to create your own cryptocurrency?
Creating your own cryptocurrency is not as hard as it might seem. There are a few key steps that you will need to take in order to create your own cryptocurrency, and most of these can be done with little or no technical expertise.
The first step is to choose a blockchain platform – this is the backbone of any digital currency, and it’s what allows you to transfer money between users or launch new coins. There are numerous options available, and all of them are free to use.
Once you have selected a platform, the next step is to create your own token. As previously mentioned, depending on the platform and toolset used, it might be an easy and straightforward project to accomplish, even for someone who isn’t a geek.
In fact, the more difficult part of the project will be to market your token and platform given the huge saturation in the cryptocurrency niche.
What are the risks of creating a cryptocurrency?
If you are considering creating your own cryptocurrency, it is important to be aware of the risks involved and make sure that you have a good plan for mitigating them. There are several key risks associated with cryptocurrency creation, most of which can be traced back to the volatility of the market. The market for cryptocurrencies is extremely volatile, and this means that the value of a coin/token can change rapidly – often within minutes or hours. This makes it difficult for people to invest in coins expecting them to become valuable over time, and it also makes it risky for businesses who want to start using cryptocurrencies as payment methods.
For this reason, creating your own cryptocurrency is a high-risk venture. There are a number of additional key factors to consider when embarking on this project, including the possibility that your coin will not be successful and you will end up spending a lot of money on development efforts and marketing campaigns.
In addition, there is always the risk that regulators might crackdown on cryptocurrencies, causing them to lose value and become extremely difficult to use.
One of the drawbacks of creating your own cryptocurrency is that it might be incredibly difficult to get people to use it. It would also be hard to ensure that the currency is decentralized and secure, something that is critical for cryptocurrencies if they are to remain viable in the long term.
What are the differences between crypto coins and tokens and why is this important to consider when creating your own cryptocurrency?
When you create a new cryptocurrency, you are either opting for coins or tokens. The difference lies in whether you create a cryptocurrency on top of an existing blockchain or you’re launching a blockchain that was developed by you. If former, we’re speaking about token. Let’s say you’re about to create an ERC20 token using the Ethereum network - then you’re creating a token. This is the path selected by the vast majority of the new cryptocurrency teams since it’s a faster, safer, and more cost-efficient way of going about this.
But if your cryptocurrency is tied to a new blockchain that you think is going to revolutionize certain industries, you’re going to create a new cryptocurrency that will be labeled as a “coin”. Interestingly, Ethereum native cryptocurrency (ETH) is itself a coin, despite the fact that it’s the most popular network for tokens.
Not to get confused, tokens and coins are often used interchangeably and might refer to the same thing, even though the terms themselves technically mean something else.
The bottom line here would be that teams that are not very blockchain proficient should certainly stay away from creating new blockchains and respective coins since there are many ways to attack new blockchains. These attacks are often carried out by seasoned crypto pros and can turn new prospective projects into mayhem.
Why is it important to create a cryptocurrency that is secure and stable?
When creating your own cryptocurrency, your aim will likely be for the cryptocurrency to appreciate as much as possible in a foreseeable future. Arguably, security is an absolutely inevitable part of this dream becoming a reality. As described above, many crypticurrency projects fail due to their vulnerabilities to bad actors and their malicious attacks.
As for the stability, pretty much the only “stable” currencies among crypto so far have been so-called stablecoins. These cryptocurrencies try to maintain a continuous peg to fiat curencies via different means.
However, speaking of your new crypto endeavor being stable in terms of value, it would likely be derived from the utility and traction of the underlying platform that creates value for the token itself. Meaning if your project is doing well and the users are flocking to it, it’s quite likely that the value of the token will not only remain stable but actually appreciate in time. That being said, if the platform is not particularly popular, there is no good reason for the underlying token to retain value.
So there you have it, everything you need to know about creating your very own cryptocurrency, we hope you have learned some helpful tips on making your crypto a success that can be applied to your business.
*This communication is intended as strictly informational, and nothing herein constitutes an offer or a recommendation to buy, sell, or retain any specific product, security or investment, or to utilise or refrain from utilising any particular service. The use of the products and services referred to herein may be subject to certain limitations in specific jurisdictions. This communication does not constitute and shall under no circumstances be deemed to constitute investment advice. This communication is not intended to constitute a public offering of securities within the meaning of any applicable legislation.