In truth, you are probably living in a cave if you haven’t heard of cryptocurrency. According to Wikipedia, there are over 1,600 cryptocurrencies flying around the crypto-sphere today. Indeed, companies launch cryptocurrencies every day. From the look of things, cryptocurrency has all it takes to displace the fiat currency. However, high volatility has marred its adoption in more ways than one. Nonetheless, virtual currency has come to stay with or without volatility, and you can develop your very own.
Are you wondering what it takes to develop your own cryptocurrency? Well, wonder no more. Yes, this piece will become your essential guide in this endeavor. Let’s get started!
Prerequisite to Develop Your Cryptocurrency
Without a doubt, the decision to create your altcoin will add value to the crypto-sphere. So, we will start here.
Differentiate Between Coin and Token
While coin and token are both virtual currencies, they have some differences. Typically, a coin exists on its own blockchain. Examples of a coin include Dogecoin (DOGE), Litecoin (XRP), and Bitcoin (BTC). But that’s not the same as a token. As a matter of fact, a token is developed on an existing blockchain, such as Cardano and Ethereum. So, you are most likely going to develop a token, aren’t you? Terrific!
In addition, both coins and tokens exist within the blockchain ecosystem. So, it’s critical you understand how coin and tokens interact within their ecosystems. Indeed, coins have their independent transaction ledgers, but tokens depend on consensus mechanism. By and large, coins are used to transfer wealth, but tokens are used to represent contracts.
Blockchain Technology Versus Cryptocurrency
Also, notice the difference between cryptocurrency and blockchain technology. While they are often interchangeable, they are actually not the same. Indeed, blockchain technology is the building block of cryptocurrency. So, you will need a blockchain to develop your Internet currency on it. Just like a house and a piece of land. True, you cannot build a house unless you have a piece of land readily available. Unless you have some mysterious ways you can get that done anyway. In that case, you have gone beyond the realm of human cognitive ability. Back to the analogy now, while your cryptocurrency is the house, blockchain technology is the land.
Choosing the Right Path
Yes, we are glad you are here! You have been amazing so far! So, let’s keep riding through the crypto-sphere together. This is a crossroads. First, you will decide whether to build an entirely new blockchain with its coin. Alternatively, develop a token from an open source code. You wouldn’t need a sorcerer to tell you that the latter is easier, would you? If you decide to go by the alternative, you also have to choose the right blockchain.
In truth, the right blockchain you will pick depends on what you want to achieve. Keep in mind, however, that certain blockchains are built specifically for certain purposes. The commonest blockchains that issuers use are Ethereum, Cardano, and Lisk. If you want to develop a utility token, Ethereum blockchain will be an awesome decision. Don’t sweat it; you will find out why pretty soon.
Developing your Cryptocurrency
The good thing is, you don’t need to be a programmer to have your own virtual currency. In fact, you can engage a programmer to do that for you. But you must have an idea of what you want to develop. The best bet is to go through countless ICO whitepapers available on the Internet. From there, you will understand what you need. You catch the drift, don’t you? Great!
If you are a programmer, you visit GitHub for open source codes. As you know, open source codes are software packages that aren’t within any specific licensing agreement. All you need to do is to effect a few modifications to the existing codes. That’s all! Yes, Charlie Lee’s Litecoin is a typical example of a coin developed this way. Afterward, take the next step.
Develop your Currency on Ethereum
Unarguably, most of the issuers out there have their coins developed on the Ethereum blockchain. The reason is that Ethereum is built for that purpose. Beyond doubt, the features of Ethereum make it a robust blockchain to deal with. As a result, other developers copy these features to build a similar platform. These features include:
- Smart contracts
- Decentralized application (Dapp)
- Ethereum Virtual Machine (EVM)
- Consensus mechanism
- ERC-20 standard
Planning your Initial Coin Offering (ICO)
When your cryptocurrency is ready, the next line of action is planning your ICO. While doing that, you are strongly advised to keep your codes available on GitHub. This will enable coders to audit your cryptocurrency. Also, be sure your virtual currency has the structural promises you make. That said, you are now off to ICO. But just before that, you will need an ICO whitepaper. The ICO whitepaper details all the plans you have for the cryptocurrency and your investors. Develop your whitepaper with as much care as you have invested in the cryptocurrency itself; it should cover the following:
- Purpose of the cryptocurrency (such as utility, payment, or investment)
- How to use the token (the structural markup)
- Number of tokens to be minted
- Token distribution (how tokens are shared among the project team)
- Fund allocation (what you plan to do with the funds generated from ICO)
- Business plan
- Team members (for effective decision-making process)
- Why people should invest in it
- And many others.
You may also engage a freelance writer to draft the whitepaper for you for a fee.
Obviously, developing your cryptocurrency is no rocket science. But it could be capital-intensive, and it requires making some tough decisions. You may be tempted to program it yourself, which will save you some money in the end, but only do that if you are really a talented programmer.
However, there’s a downside. A hacker could easily take advantage of your bugs or loopholes to his benefit. Before you say Jack Robinson, he is feasting on your weakness. So, be sure it is something you can do before doing it yourself. Perhaps you will see many DIY (do it yourself) articles online. What they don’t tell you is what a mistake could cost you. In fact, it could ruin the entire project. That said, the future of cryptocurrency is bright. Why not give it a try?
This article should not be taken as, and is not intended to provide, investment advice. Users are ultimately responsible for the investment decisions he/she/it makes based on this information. It is your responsibility to review, analyze and verify any content/information before relying on it. Trading is a highly risky activity. Do consult your financial adviser before making any decision. Please conduct your thorough research before investing in or creating any cryptocurrencies and read our full disclaimer.
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