The rising popularity of cryptocurrencies is beyond one’s expectations. It all started in 2009 when the first cryptocurrency, “Bitcoin,” was created; since then, other cryptocurrencies, including Ethereum, Litecoin, and Ripple, have been developed. Today, the advancements in blockchain technology allow most people to create their own cryptocurrency. However, most people wonder how to create cryptocurrency and what the steps are.
If you are also one of those, who want to start a crypto brand but have no idea how to take the start and create one, then you are in the right place. This guide will help you learn the process and solutions used in cryptocurrency development.
Difference Between Coins And Tokens
When you are nearly launching a new cryptocurrency for your new business, you first need to learn the difference between coins and tokens. Both coins and tokens come under the umbrella term of cryptocurrency, but a coin like (Litecoin or Bitcoin) has a standalone, independent blockchain. Whereas a token (like Basic Attention Token) is a unique outlay of broader smart contracts platforms like Ethereum that allows users to create, issue and manage tokens that are derivations of the primary blockchain. In addition, tokens dont have value or uses outside of a specific organization or community.
Cryptocurrencies work as fiat currencies without any centralized bank. Similarly, users hope to use their coins to store, build or transfer wealth. While the tokens usually represent some kind of contract and contain specific utility value for a blockchain application. For instance, Basic Attention Token benefits content creators through the Brave browser. Additionally, tokens can be used as a contract or a digital version of something like loyalty points or event tickets.
How to Create Cryptocurrency? 7 Simple Steps
After learning the difference between coin and token, you can start taking crucial steps to creating your own cryptocurrency. Here is the step-by-step process; you can successfully launch and create cryptocurrency by following these steps.
Choose a Consensus Mechanism
The primary step is to select a consensus mechanism. The consensus mechanism is the blockchain’s operating protocol that determines whether or not the network will consider a particular transaction. There are two common types of consensus mechanisms: proof of work (PoW) and proof of stake (PoS). Proof of work is one of the most common consensus systems used by Bitcoin and other cryptocurrencies. Further, in PoW, miners compete with each other to validate the transactions and add blocks to the blockchain. The miner who adds the blockchain earns cryptocurrency as a reward.
On the other hand, Proof-of-stake relies on validators who stake their cryptocurrency to verify transactions. In PoS, validators take the miner’s place and verify transactions by staking crypto on the network. This involves locking up a certain coin amount for the set period, during which the coins can’t be usable. The best thing about PoS is that it’s comparatively more energy-efficient than PoW.
Pick a Blockchain Platform
After deciding which consensus mechanism to use, you must pick your own blockchain platform. For example, if you are considering PoW, then the Bitcoin blockchain is the best choice. Similarly, opting for PoS means you have numerous platforms to choose from, like Cardano, Ethereum, and the speedy EOS.
Create the Nodes
According to your chosen blockchain platform and your decided functionality and workings, you need to design the nodes accordingly. Nodes are essential and the backbone of any distributed ledger technology (DLT), including blockchains. Similarly, you have to determine how your nodes will work when creating cryptocurrency. For instance, will the permissions be private or public? What would hardware details look like? Will the hosting be on the cloud or on-premises, or both? Etc.
Build the Blockchain’s Internal Architecture
Now plan the internal function of your cryptocurrency’s infrastructure and how your cryptocurrency’s network will work. Similarly, you need to ensure blockchain functionality is on point before the coin’s launch because once the mainnet has launched, you won’t be able to change several settings and parameters. Therefore, the best practice is to double-check every aspect beforehand, including the cryptocurrency’s address format and what address format you want your blockchain to follow to provide exchanges between different cryptocurrencies without a third-party intermediary.
After designing the internal architecture of your cryptocurrency, it’s time to integrate the APIs. The API (Application Programming Interface) purpose is to allow different software applications to communicate with each other. For instance, if you opt for PoW, you will need to integrate Bitcoin API. Likewise, if you want to use the PoS system, you must integrate the Ethereum API. This way, your cryptocurrency will interact with the Ethereum blockchain. Once you successfully integrate the APIs, you are ready to launch your cryptocurrency.
Design the Interface
Built a top-notch cryptocurrency, but users can’t be able to make the most out of it properly? This can happen when your interface is not good because the interface ensures smooth communication between the blockchain and the participants. So, the best is to ensure the web, FTP servers, and external databases are up to date. Moreover, the back-end and front-end programming should be done according to future developer updates.
Make the Cryptocurrency Legal
Consider making your newly created cryptocurrency legal to avoid future troubles. The process of legalizing the cryptos is way straightforward, all you require is to set up your company and get a license from the government. Additionally, register your new cryptocurrency with the Financial Crimes Enforcement Network (FinCEN)-responsible for combating terrorist financing and money laundering.
Also, some countries have banned cryptocurrencies, so you need to research whether in your country it is allowed or not and then launch your one. You can also hire a lawyer with relevant expertise to help you make your cryptocurrency legal.
Hire a Blockchain Developer Who Can Create Cryptocurrency For You
If you want to create cryptocurrency effortlessly, consider hiring a blockchain developer or consulting a company that provides relevant services. Numerous cryptocurrency coin development companies work best to create and maintain new cryptocurrencies and blockchain networks for many businesses. Similarly, ideally, you can collaborate with a trustable cryptocurrency development company like Geeks Root and launch your own cryptocurrency.
Undoubtedly, cryptocurrency possesses an auspicious future as compared to other currencies. So, to run a successful business, you must start creating your own cryptocurrency today.