How to create your own cryptocurrency?
There are many reasons for creating your own cryptocurrency.
With a new token, you can raise funds, solve a problem, and help with faster transactions.
Whatever your reasons, building a cryptocurrency is still a daunting task. This article has simplified the process of building a new cryptocurrency. Read to learn through a step-by-step process.
How to Create Your Own Cryptocurrency? Learn in 9 Steps
Follow these nine steps for creating your own cryptocurrency from scratch –
1.Outline your Objective
Cryptocurrencies serve different objectives. Some creators create them to reduce complexities in overseas transactions, while others offer investment opportunities. Many Ethereum-based cryptocurrencies enable creators to launch apps.
Among these objectives, what’s the one objective that you want your cryptocurrency to serve?
First, start by outlining a goal statement around your cryptocurrency’s objective.
Here are some questions you can ask yourself –
- What problems will my cryptocurrency solve?
- Which target audience is your cryptocurrency aiming toward?
- What’s that one unique feature that makes your cryptocurrency different among thousands?
The purpose of your cryptocurrency is to shape what it will transform into in the future.
2. Consensus Mechanism
The next component for creating your own cryptocurrency is a consensus mechanism. It’s a protocol that helps maintain a transparent ledger on Blockchain. The consensus mechanism records the transactions made on the Blockchain, thereby keeping the data recorded. As a result, the transactions become authentic and valid for the sellers and the buyers. There are three types of most common consensus mechanisms.
Proof of Work: miners have to solve a complex math equation to validate transactions on the Blockchain. This consensus mechanism is the proof of work.
Proof of Stake: this consensus mechanism requires validators holding stakes of the token. Validators get recognition based on how many coins they hold, and they have to be willing to stake as collateral.
Delegated Proof of Stake: There’s another consensus mechanism called the Delegated Proof of Stake, where the coin holders vote to choose delegators. Then, the delegators validate the transactions for them.
When selecting the Right Consensus Mechanism, think of the goals your cryptocurrency will serve. Get more information on consensus mechanisms by reading blogs like Coinfomania, and other popular podcasts, and whitepapers.
3. Choose a Blockchain Platform
Every cryptocurrency requires a blockchain platform to record the transaction and circulate the tokens. When creating your own cryptocurrency, you can create a new blockchain or use an existing one. In many cases, creators alter an existing blockchain to create their own tokens.
Platforms like Ethereum, Binance Smart Chain, and Polkadot allow creators to build their own crypto tokens. It’s critical to choose a Blockchain platform that meets your requirements in terms of speed, fees, and overall efficiency.
4. Design Your Blockchain Nodes
After selecting the Blockchain for your cryptocurrency, build the nodes that operate as its components. The nodes are fast computers that verify, and store information related to a transaction in Blockchain.
Your cryptocurrency can rely on one of two types of Nodes.
Full Node: A network of fast computers holds the entire Blockchain and helps validate the transactions made.
Light Nodes: Light Nodes, on the other hand, are a network of fast computers holding part of a Blockchain. This type of Node depends on the central Blockchain for validating and recording transactions.
5. Build Internal Architecture
how to create your own cryptocurrency? After you’re done setting up your blockchain platform and nodes, you have to build your internal architecture. It consists of different steps like setting up permission, managing keys and address formats, and storing transaction-related data. Using smart contracts is also part of building your internal architecture for cryptocurrency.
6. Create a New Blockchain
Even though there are several blockchains to rely on, creators may want to build their own blockchains. In that case, they have to build a codebase on programming languages like Solidity, Python, and C++. But always remember to test your Blockchain in a controlled environment before you get it out to the public.
7. Design a User Interface
Once you are done creating your own Blockchain, go ahead and build the user interface for your cryptocurrency. This is the part that allows applications to connect with Blockchain. This helps the users interact with your cryptocurrencies through the API and the UI.
API: the API allows external applications to interact with cryptocurrencies.
User Interface: The user interface plays a significant part when interacting with the coin or token. If it’s easy to understand, it has the potential to attract a huge number of adopters.
8. Publish Your Whitepaper
The whitepaper of your cryptocurrency is a detailed document explaining what it is and how it operates. It includes the technology, token omics, and use cases. It suggests a roadmap for specific investors and users. In fact, for many cryptocurrencies, the whitepaper serves as key marketing material.
The white paper includes three main parts –
Introduction: Describe the problem you’re addressing.
Technical Details: Explain the way your cryptocurrency works.
Token Distributions: explain the token distribution process among the key stakeholders.
9. Launch the Cryptocurrency
The next stage is to finally launch your cryptocurrency. With your API designed and the whitepaper documented, you’re nearing the final stage. But before you launch the cryptocurrency, ensure to test it properly.
Consider stages like marketing campaigns, Initial Coin Offering and Exchange Listing to start your cryptocurrency launch.
Initially you can sell some of your tokens to raise funds. Investors who want a stake of the tokens can help with initial adoption.
Social media campaigns and community building through discord, telegram, and several other social media channels help build the marketing momentum. Finally, list your cryptocurrency on popular exchange platforms to get new buyers.
Final Words
Launching a new cryptocurrency takes a lot of work. You’ll need a team of experts to help you get through every step of the way. From outlining your objective to finally launching the token on exchange platforms, the process can often take years.
But, with thorough research, planning, and strong community engagement, it’s not impossible to build a new cryptocurrency. While you start your journey, don’t forget to stay updated with the latest cryptocurrency trends and make more uniform decisions.