Ready to get into the crypto game? It is not as difficult as you think! Learn how to create your own cryptocurrency with our step-by-step guide!
In this beginner article, we’ll take a look at what it takes to create your own cryptocurrency, and the various options available to you.
Join us in showcasing the cryptocurrency revolution, one newsletter at a time. Subscribe now to get daily news and market updates right to your inbox, along with our millions of other subscribers (that’s right, millions love us!) — what are you waiting for?
What To Understand Before You Start
There are many things to grasp before you start the complex process of designing your crypto. Just like any digital real estate on the web, you’re going to need to market the new asset effectively to ensure it gains traction and gets adopted by a community.
Let’s start with the basics:
Depending on the route you take, you may require anything from basic to specialized technical and programming knowledge as well as a hefty commitment of time, money and other resources (patience, grit and a bit of insanity come to mind). Finally, maintaining, nurturing and growing your cryptocurrency over time will be the biggest challenge of all.
Why Does a Blockchain Need Cryptocurrency?
Coin vs Token
Coins have a specific utility over their whole network (such as for gas or governance) and are normally used to store, create or transfer monetary value between all participants. For example, some ETH is required as a gas fee to power any transaction on the network, whether the currencies involved are ETH or an ERC20 token.
A whitepaper is very important for early fundraising and drawing attention from early supporters. It blurs the line between an academic paper and a business plan, relaying both technical and economic specifics including how the cryptocurrency aims to meet a specific need, solve an existing problem(s) and improve our lives.
Whitepapers should also provide insight into the crypto’s tokenomics and roadmap. They should be easy to understand and offer technical explanations of the project's competence.
What To Consider Before Starting?
Before creating a cryptocurrency, there are a few important considerations to mull over. While most will be simple enough, others (such as legality) could cause you a massive headache if you don’t do your homework.
Is It Legal in Your Country?
First, check if your cryptocurrency project is legal to execute and maintain in the country you are in. Cryptocurrencies are still banned outright in some countries like China, while in other countries they are strictly regulated. Even in the US, there’s a constant battle going on between regulators and crypto companies. Regulators often keep crypto in a legal gray area, where regulations could suddenly change from crypto-friendly to hostile.
What Is the Purpose and Use Case of My Cryptocurrency?
Every cryptocurrency should, in theory, have a use case or purpose that serves as a unique selling proposition (USP) for your crypto. This use case, as outlined in the whitepaper, will determine the type of blockchain and technology you will use.
Which Consensus Mechanism Should I Use and Why?
Should I Issue a Coin or a Token?
There are big benefits to creating a token over a coin: it’s easier and much cheaper to create a token than to issue a coin, which requires you to establish your own blockchain and then try to secure it. For example, an ERC20 token can be created in minutes and immediately leverages Ethereum’s superior and battle-tested security, while also having access to a huge compatible ecosystem and community of existing users.
However, if you decide on issuing a token, you’ll have to adopt the architecture and rules of the underlying blockchain, and likely also all the transaction fees you generate will be denominated in its native asset. For example, all ERC20 token transactions require some ETH for gas in order to execute.
Tokenomics is an absolutely vital component of any cryptocurrency which is still completely misunderstood by some crypto investors.
Do I Get a Developer or Build It Myself?
Whitepaper and Website
Is your whitepaper sophisticated, specific and different, yet simple enough to understand? Creating a clear and concise whitepaper and website helps to claim a rightful stake for your cryptocurrency, and aligns your vision and strategy with its roadmap for the whole world to see and invest.
3 Ways to Create a Cryptocurrency
Now that you hopefully know what you want to build and why, it’s time to actually create your magic internet money. There are three ways in which you can create your own crypto asset:
- Modifying (forking) an existing chain
- Building on an existing layer-1 or layer-2 blockchain
- Create a New Blockchain (Create a Coin)
Launching your own chain to create a cryptocurrency is the most difficult path by some margin, as it requires resources such as advanced coding and other technical skills. While educating yourself through online courses can help, they may require some pre-existing knowledge and also may not be in-depth enough.
Modify (Fork) an Existing Blockchain (Create a Coin)
Don’t have the resources to create your own blockchain? You can use the source code of another blockchain to create a new blockchain and native digital currency. Forking an existing blockchain might be quicker and less complicated than creating one from scratch, since the code for most blockchains is open source, allowing you to download and modify it as you wish. This method still requires advanced technical knowledge to avoid security vulnerabilities, bugs, flaws and other issues.
Use an Existing Platform (Create a Token)
Ethereum network uses the ERC-20 standard, which is less technical than the others and doesn't require as much programming knowledge. However, your cryptocurrency is dependent on the blockchain you choose.
Can’t code? No problem. There are plenty of developers and companies that can do the technical work and then hand you a finished product. It's also a good idea to at least try to learn a bit of programming in order to understand the existing blockchain infrastructure of the platform you're working on and figure out when you’re being overcharged for your ignorance.
How To Create Your Own Cryptocurrency: Step-by-Step Guide
Here’s a step-by-step overview of the general process. To keep things simple, we will assume you’re going to create a cryptocurrency with a real purpose and vision. If you want to launch some silly token on Ethereum or other chains simply, there are plenty of simplified token creation platforms on the web that will allow you to create one in minutes.
Step 1: Research the Use Cases
Before you start building, figure out the following as we covered earlier: What are your use case and unique selling proposition (USP)? What problem does your crypto solve? What benefits will it offer to potential users? Is any other chain already doing it, and if so, can you do it better?
Creating a new crypto asset is no different from launching a new startup business in many ways, and the same planning is required to garner enough hype, something that the new generation of NFT founders is becoming very adept at. Do a lot of marketing analysis and research in order to boost your chances of achieving real product/market fit.
Knowing what problem your token solves will also help you identify a responsive target audience and create a highly targeted marketing plan post-launch.
Step 2: Choose a Consensus Mechanism
Step 3: Select a Blockchain Platform
Choose a blockchain platform to host your token. Ethereum and Binance Smart Chain are popular choices, but there are many other options to consider. Consider factors such as cost, scalability and security when making your decision.
Step 4: Publish the Whitepaper on Your Website and Social Media
With steps 1 to 3 behind you, you should really understand what you’re trying to build inside out by now. It’s time to put all this information together in your own manifesto. Research successful launches by other chains and figure out what they did right and wrong. Compare their post-launch results with their tokenomics and network emissions. Create your own tokenomics structure in response. Now, write your whitepaper and publish it on your website. Then share it far and wide.
Step 5: Design the Nodes
Nodes are the building blocks of a blockchain that store and verify your transactions.
Get the necessary hardware such as processors, memory, and disk size if it’s required.
Step 5: Establish Your Blockchain's Internal Architecture
Now, create your blockchain's internal architecture and its rules and parameters, such as address and public/private key formats, permissions and how the crypto asset will be issued. Be sure to carefully consider these factors as they cannot be changed without a software upgrade once the platform is running.
Step 6: Create Your Coin or Token
Now, it’s finally time to create your crypto asset. If you’re going the ERC20 route, you can take an online course first and use one of many free online tools, but be sure to do thorough research first. Make sure the platform can be trusted and is capable enough, in order to avoid malicious code and scams. Alternatively, hire a blockchain developer with good ratings on a crowdsourcing freelancer site if you can afford it.
Step 7: Design the API and User Interface (UI)