Trading in cryptocurrency is something that most people have heard and thought about ever since the subject matter got popular. But, building a cryptocurrency yourself might not have crossed the minds of many.
As blockchain technology advances, the probability of cryptocurrency adoption for different use-cases might increase. These possibilities could be from investment and purchasing purposes to transactional uses.
In addition, with the understanding of blockchain technology, the process to start your own cryptocurrency also gets simplified to some extent. Once you learn how to make your own cryptocurrency, there are several benefits that you may derive from it.
The following article aims to briefly cover the meaning of crypto and the process of creating a cryptocurrency. Read till the end to learn more!
What Is Cryptocurrency?
Crypto experts define cryptocurrency as a digitized asset that is spread through a shared network of multiple computers. The decentralized nature of the blockchain network shields crypto from any control by the government regulatory bodies.
The term cryptocurrency is derived from cryptography which is an encryption technique used to secure the blockchain network for cryptocurrency. Therefore, knowing the basics of crypto would enable you to enter the process of creating crypto reasonably.
Another essential basic to consider before planning to create a cryptocurrency is that there are two types of cryptocurrencies: one is a crypto coin, and the other is a crypto token. While a crypto coin operates on an individual blockchain that records all its transactions, a crypto token works on an existing blockchain infrastructure.
For instance, Ethereum and Bitcoin are separate blockchain networks with their crypto coins, ETH and BTC. On the other hand, MANA and GALA are crypto-tokens built on the Ethereum blockchain infrastructure.
Can You Create Your Own Cryptocurrency?
The answer to this question would be affirmative. You can begin making your own cryptocurrency if you have an in-depth knowledge of blockchain technology and basic coding skills at the minimum.
In addition, defining a clear business purpose and procedure for building a cryptocurrency is also important. Depending on your specific business projects, you may decide whether you’ll need to create a crypto coin from scratch or use an existing blockchain as the foundation to create a crypto token.
Furthermore, you might have to incur some costs to create crypto that would vary with your choice of cryptocurrency. These costs would come at different stages, such as development, external audit (initial crypto offering security audit), white paper and documentation, promotion, and coin placement.
Now, without further ado, let’s dive into the procedure you might be eager to know: “how to create my own cryptocurrency!” The following section will cover everything you need to know to make a cryptocurrency.
How To Make Your Own Cryptocurrency?
You’ll need to follow the steps mentioned below to make your own cryptocurrency. However, it is important to note that the procedure would slightly differ if you plan creating a crypto coin than creating a crypto token.
To create a crypto coin, you’ll require establishing a blockchain network, the steps for which are given below.
Step 1. Identify the use-cases and clearly define the objectives for your cryptocurrency creation. This will play an important role in assisting to carry forward the other steps without conceptual discrepancies.
Step 2. Choosing a consensus mechanism for the blockchain is the next step to setting standardized protocols for the blockchain network nodes to follow. These protocols would assist the participating nodes in legitimizing transactions. A list of popular consensus mechanisms is available per the features one wishes to add to their blockchain.
Step 3. Choosing a blockchain platform follows and depends on the blockchain consensus mechanism selected. Different blockchain platforms might administer other consensus mechanisms. Choose the best from the list of blockchain platforms for 2022.
Step 4. The next step is designing the nodes for the blockchain network. A node is a device connected to the internet that performs tasks like storing data and verifying and processing transactions supporting the blockchain network. In addition, nodes provide support and security and determine the efficiency of the blockchain.
You can keep in mind three considerations when designing a node for your network.
- What type of permission would you prefer to assign to your blockchain network: Public, Private, or Hybrid?
- What place would you prefer to set as a host for the incoming and outgoing data: Cloud, Premise, or Hybrid?
- Lastly, which operating system would you choose as the base for your blockchain network? Ubuntu, Windows, Red Hat, Debian, CentOS, and Fedora are the most common choices, among several other options.
Step 5. Establishing your blockchain’s internal architecture comes next. It entails setting essential parameters that would determine your blockchain network’s functionality. In addition, these parameters cannot be changed once the blockchain starts running.
Therefore, while creating a crypto coin, you should think thoroughly about the stipulations as you construct the internal structure of your blockchain. These may include permission type, blockchain address format, public and private key format for transaction signatures, and the rules for asset issuance are some of the parameters to consider.
Step 6. Choosing a suitable API or Application Programming Interface is essential to simplify the interaction between software. Mostly the blockchain platforms have built-in APIs. If that’s not the case, several blockchain API providers are available for assistance.
Some examples of the blockchain API include Neuroware, Factom Alpha, ChromaWay, Coinbase, and Gem.
Step 7. Progressing toward the final step comes designing the interface of the blockchain network for the user and admin. An easy-to-navigate and friendly interface would enable effective communication between the blockchain network and its participants.
Step 8. The final step involves verifying your cryptocurrency’s legal compliance. Again, take expert legal advice before minting your cryptocurrency to check that it is compliant with all relevant laws and regulations.
If you plan to create a crypto token on an existing blockchain, it would require some technical expertise or at least moderate computer knowledge. However, making a token is the fastest and cheapest way to create your own cryptocurrency. Therefore, following the steps enumerated below would be helpful to create a crypto token.
Step 1. Choose a blockchain platform you would like to use to host your token. Ethereum, BSC or Binance Smart Chain, and Stellar are a few of several blockchain platforms available.
Step 2. Customize your token according to your preference and create a crypto token that would fulfill your business objectives. Though this stage requires advanced technical knowledge, free online tools are also available to facilitate the process.
Step 3. Finally, you can begin minting your cryptocurrency and issue a batch of tokens per your convenience and strategy. In the final stage, the advantage of using a trusted established blockchain platform like BMC or Ethereum is that one may not require the services of a lawyer or professional auditor to legitimize your crypto token.
Q1. How Much Does It Cost To Create Your Own Cryptocurrency?
Depending on the features and the built of your blockchain to create a cryptocurrency, on average, the cost of creating your own crypto might range between $1000 to $5000 US.
Q2. Is Making Your Own Cryptocurrency Profitable?
Experts believe that building your cryptocurrency is quite lucrative and remunerative. However, initially, it does require some amount of investment. Therefore, before you start making your own cryptocurrency, you should do proper research and ascertain the availability of adequate investment funds.
Q3. How Long Does It Take To Create A Cryptocurrency?
The time to create a cryptocurrency depends on the level of technical expertise you may have. For example, if you use automated tools to develop crypto-tokens or crypto-coins, it might take around 20 to 30 mins.
On the other hand, modifying an existing cryptocurrency code might take four hours, given you are proficient on the technical front. If you plan to build your blockchain and create your cryptocurrency from scratch, it might take more time, maybe a few weeks.
Q4. Is It Legal To Make My Own Cryptocurrency?
Crypto experts and legal advisers proclaim that making your own cryptocurrency for business or personal use is legally permissible. However, domestic and international cryptocurrency regulations must be adhered to when you plan to start your cryptocurrency.
Wrapping Up On Creating A Cryptocurrency
The process of creating a cryptocurrency is not too difficult. Once you get a basic idea about how cryptocurrency functions and do your research on everything you need to know regarding building your own cryptocurrency, you’ll be able to construct an effective action plan and follow through. Just remember to consider the laws and regulations pertaining to the same, and you’ll be good to go.
Author: Nitisha Lal
Nitisha Lal is a writer enthusiastic and curious to learn new things. Currently, she writes about the latest developments in technology, particularly around Web3 and the Metaverse. She enjoys nature walks, capturing the world around her on the phone, or reading books when away from work.