Very few people know how to create a cryptocurrency. The internet is littered with false information surrounding these confusing digital currencies. Even worse, there are so many ways to create a cryptocurrency that it causes more confusion when people try to gain an understanding of the process.
The most popular and noteworthy cryptocurrency is Bitcoin. Most of the other coins you may have heard of are basic revisions of the original coin. It might seem exciting to know how to create a cryptocurrency, but is it as easy as some people claim?
Cryptocurrency: Who Cares?
If we had to pick the most prominent buzzword of the last five years, cryptocurrency would definitely be in the running. There is so much excitement and wonder revolving around these digital coins, but why?
What is a cryptocurrency?
Before diving into how to create a cryptocurrency, you must first understand the basics. We will cover everything, so even someone with limited knowledge of digital coins will be able to know how to create a cryptocurrency by the end of the article.
Some people believe that crypto will eventually replace currency altogether, some think it's a fad that will fade away over time. No one has an answer for certain; in the meantime, people all over the world are benefiting from digital currency.
A cryptocurrency is a decentralized form of digital currency that uses advanced encryption to regulate the generation of units and verify the transfer of monies.
Benefits of Cryptocurrency
The most significant reasons people use cryptocurrency is to remain anonymous and secure when transferring money from one place to another.
No central authority or bank regulates cryptocurrency, so that provides additional freedom from things like transaction fees.
Due to the advanced encryption, cryptocurrency has seen corruption over the years. The Silk Road is one of the most infamous scenarios of people abusing Bitcoin.
The Silk Road was mainly a website where users could go and buy illegal goods and pay for them using cryptocurrency. Because authorities couldn't track the transactions, they had a hard time shutting down the operation.
Here are a few more of the many benefits of cryptocurrency:
Fast and unlimited transactions
When you use a bank to transfer money, it goes through a lengthy approval process. That typically takes a few days. With cryptocurrency, you can transfer as much money as often as you want to anywhere in the world.
Low transaction fees
Banks issue hefty transaction fees on everything while the fees for transferring cryptocurrency are much lower. If you know how to create a cryptocurrency, you could set your own standards.
Every transaction made with cryptocurrency gets entered into the blockchain. Blockchain is essentially a ledger of transactions that is continuously updated every time someone moves money around. The key to a blockchain is, everything is still anonymous. We'll get into more detail on blockchain later.
How to Create a Cryptocurrency: The Blockchain Story
There are two parts to every cryptocurrency. You have the coin or token itself and the blockchain that supports it. If you don't understand how they both work together, you'll never understand how to create a cryptocurrency.
Blockchain is a list of records called blocks. These are all linked together using cryptography. Each block in the chain contains a timestamp and transaction data. The reason blockchain is so useful is because it is resistant to modification. That factor prevents corruption and human error.
This type of technology is the invention of a person or group of people known as Satoshi Nakamoto. No one knows the origin of this person or if he or she is a person at all.
Another huge point to understand about blockchain is that it has no central ownership. All the data is time-stamped and recorded live. This data gets managed by a series of computers all over the world.
The fact that no one owns the blockchain means that it is completely decentralized. Decentralization results in transparency and accountability for everyone involved.
You have two choices
Now that you understand how blockchain works, you can learn the difference between a coin and token. If you want to learn how to create a cryptocurrency, you have two options.
Let's break these two options down.
Creating a coin from scratch
First, if you are looking for a simple way to create a cryptocurrency, you should continue reading past this option. To create your coin, you need to have experience with this type of technology or be willing to pay someone who has the experience.
For people with experience, it could be as simple as copying Bitcoin's code and changing some variables. To understand that type of technology requires advanced expertise though.
Once you have your coin coded, you then need to create the blockchain to record all the transactions for your coin. This process would require you to code everything yourself or hire a development team. If you have the capabilities or the budget, you could go for this strategy.
Creating a token
If you don't have a lot of experience and you want to know how to create a cryptocurrency, you could use this simpler method. Creating a token allows you to utilize already existing blockchain technology, which has a lot of bonuses.
The existing blockchain already has a secure network with protection from fraudulent attacks. You can utilize what is currently popular and working.
Creating a token also requires less time, money, and resources to accomplish. You'll get all the benefits of creating a coin without a majority of the work.
Coin versus token: compared
Here is an easy to follow breakdown of the two cryptocurrency creation methods:
It's Forking Time
For everyone who elects to build on an existing blockchain, you'll need to do what's called forking. If you want to learn how to create a cryptocurrency, continue reading to learn about forking.
What is forking?
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It takes a lot of time and knowledge to build a cryptocurrency from scratch. Why not utilize the talent and skills of other people to your advantage?
If you don't possess the coding skills or resources to pay someone, you could fork an existing coin. This process is essentially like an update to the coin that is already present.
You would run the same software and share the same ledger as the current coin, but you would make small changes or improvements wherever possible.
Soft versus hard forks
Forks have two different classifications, hard and soft.
A hard fork requires 90 to 95 percent of the nodes for the software update. That means that the system will not accept the nodes if you haven't updated the software.
A soft fork is essentially the opposite. It is a less demanding update that requires only a portion of the nodes, and people with an older version can still operate the software.
What is a node?
We've got some more terminology for you. A node is one of the computers used to manage the cryptocurrency. Each coin and block gets operated by a series of computers, and each node is one of those computers.
How to create a bitcoin fork?
One of the most straightforward forking strategies would be to use bitcoins existing infrastructure to create a token. The bitcoin code is open-source, so you could go in and build on what already exists by adding new features or addressing shortcomings.
You have two choices when creating a bitcoin fork:
Use a fork generator
Using a generator is about as simple as it gets. If you don't have any technical knowledge, you could go in and create a bitcoin knockoff in a few minutes. The generator will change a few parameters of bitcoin and create a new coin.
Do it yourself
If you are up for a challenge, you could dive in head first and create the bitcoin fork yourself. Here's how you do it:
Benefits of Creating a Cryptocurrency
Cryptocurrency has its benefits, and it never hurts to be an early adopter in technology. If you want to know how to create a cryptocurrency because it's necessary for your business, then that is a no-brainer.
But, what about people who are simply curious about the process but might not understand the many benefits of having your own digital currency.
Here are the benefits of knowing how to create a cryptocurrency:
How to Create a Cryptocurrency: The Steps to Take
By this point, you should have a solid understanding of what cryptocurrency is and how the process of creating one goes. To make things simpler, we're going to break down each step in detail, so you understand everything that goes into creating your own digital currency.
Step 1: Coin or token?
Learning how to create a cryptocurrency might seem like an exciting venture, but you want to put a lot of weight on each decision you make. The first decision is choosing to create a coin from scratch or fork and get a token.
The choice you make here will determine each step following after, so choose carefully. If you do not have a lot of coding experience or the funds to pay a development team, we recommend forking bitcoins structure and creating a token.
Step 2: Choosing a team
If you decide to create a coin from scratch, you will need to work on building the best team around you. It's important to bring in the most experienced individuals who will help drive your success and the success of your coin. By hiring the right people up front, you'll prevent problems down the road.
Step 3: Crafting your investor portfolio
Once everything is up and running, you'll need to craft a top-notch white paper for investors to judge the quality of your coin. This document needs to be incredibly comprehensive, and you have to display the value and return these investors will get from investing with you.
Your white paper should cover the following:
Step 4: Pushing it out
The success of a new coin ends if it doesn't have active promotion behind it. You need to promote everywhere, including social media, blogs, email, and paid ads.
All of the most successful currencies have strong communities behind them. Make sure you can answer peoples questions and that you have plenty of support behind your coin.
How to Create a Cryptocurrency: The Hidden Costs
You most likely already know that creating a cryptocurrency is expensive. The key is to learn how to create a cryptocurrency in the most efficient way possible. The price of your coin depends on a lot of factors. If you use existing technology, it won't cost as much as if you created the coin from scratch.
Here is a general breakdown of the costs associated with creating your own cryptocurrency:
Do You Have What It Takes?
You might be asking yourself if it's worth the work and financial investment. You could choose the easy way out and create a bitcoin fork and call it a day. If you aren't afraid to get your hands dirty, you could build a development team, pull out your wallet, and create a whole new coin and blockchain that is truly yours.
Regardless of what path you choose, make sure you either have the right experience or the right team to guide you along. Learning how to create a cryptocurrency is an exciting adventure, and you want everything to go as smooth as possible.
If you're thinking of creating your own digital currency, leave us a comment and let us know how you plan to tackle the job.