How to Make a Cryptocurrency: A Comprehensive Guide

The launch of a new digital currency is rather a complicated task, which requires a lot of time and striving. In this material, we will shed light on the general algorithm of making your own cryptocurrency and address hidden hazards on the road of its implementation.

Understanding Cryptocurrencies

Not long ago cryptocurrency was the clear case for the inhabitants of Silicon Valley. But these days even first-graders talk about it. A few years ago, it seemed like a hype technology that most people could safely ignore like self-balance scooters or virtual reality goggles. But its economic and cultural power has become so great that it can not be denied. Creators of thousands of live cryptos on the market embody unique and not-so-unique features and functions in their projects. However, it is not a secret that about 80% of them are still based on Bitcoin, Ethereum, or other cryptocurrencies or are their forks.

What Is a Cryptocurrency?

Cryptocurrency is an electronic means of payment with no physical expression or form. The basic unit of measurement is coins. They are used like traditional money as the means of payment for goods or services and are subject to storage, and transfer to third parties. The principle of operation of digital coins is built on an open data transfer protocol. All actions, including the emission of new coins and transaction processing, are performed collectively by the network participants.

Cryptocurrency could also become a sort of universal key for a new generation as it is the fastest way to update your cultural consciousness and unravel the ways of thinking and behavior of today’s youth.

Benefits of Creating Your Own Cryptocurrency

If you have a business or are cultivating arts, making your own cryptocurrency or a token is worth the candle as it helps with brand promotion and gaining profit.

If you need to fund an early-stage company or start a crowdfunding campaign, issuing a cryptocurrency will be a means for attracting investors’ capital. Even if you don’t have a startup, it will be a valuable experience that can play into your hands in the future perspective when the share of digital assets in the financial market grows.

Having your own cryptocurrency provides an advantage over your competitors through increased efficiency and superior customer service. It also provides an alternative to payments for customers from all over the world, including unbanked users.

Methods for Creating a Cryptocurrency

Looking for ways how to make a crypto coin? Below we list several alternatives available.

Option 1: Create a New Blockchain and a Native Cryptocurrency

This is the most complex and resource-intensive method to create a blockchain from scratch, but it offers the greatest versatility in terms of customization and management. By creating your own blockchain, you have total control over all aspects of the project, from the consensus mechanism to the economic model.

Option 2: Modify or Fork an Existing Blockchain

Forking is the process of creating a new cryptocurrency by making changes to the code of an existing blockchain. This method allows a new coin to be created quickly and efficiently using a proven and secure infrastructure. An example is Bitcoin Cash, which was created as a BTC fork. However, despite the advantages, this approach requires vast technical knowledge and understanding of the source code. This would involve taking the open-source code found on GitHub, modifying it, and then launching a new coin with a different name.

Option 3: Create a New Cryptocurrency on an Existing Blockchain

The third and easiest option for those unfamiliar with coding is to release a token. Tokens are digital assets created on existing blockchain platforms such as Ethereum. Creating a token is a relatively easy and quick way to launch your project without having to create your own blockchain. Tokens such as ERC-20 on Ethereum allow developers to easily integrate their projects with existing applications and services.

Option 4: Hire a Blockchain Developer

Another option to introduce a new project into the world of cryptocurrencies is to hire a blockchain development specialist or even an agency. Dozens of reliable blockchain-as-a-service (BaaS) companies have been invented to maintain and develop blockchain and cryptocurrency networks. In this case, you can free up your time to focus on growing your business and significantly reduce costs by doing away with many elements such as editing and specific updates by partnering with experts who are always up to date with the latest developments and innovations in the industry.

Creating Your Own Cryptocurrency: A Step-by-Step Guide

After learning methods of making your own cryptocurrency we can move forward to consider the steps to create it.

Step 1: Determine the Purpose of Your Cryptocurrency

First of all, you need to determine what unique value or solution to the problem your cryptocurrency offers. It could be a new way to process transactions, an innovative economic model, or unique security features.

At the same stage, a business plan for cryptocurrency is drawn up, containing the financial aspect, the type of cryptocurrency, characteristics of the product, as well as a development plan.

Step 2: Choose a Suitable Blockchain Platform

To launch a coin, it is necessary to choose a blockchain or platform for its basement or to think through the architecture of your blockchain when developing a coin from scratch. This will help build the logic and define the rules of the system. Depending on the applicable consensus mechanism, you have to choose a blockchain platform that supports it. For example, if you have decided on the PoS algorithm, the Ethereum, Solana, Cardano, or Near blockchain will be suitable.

After that, developers move directly to writing code, smart contracts, implementing the technological infrastructure, engine, personal account, and connecting e-wallets.

Step 3: Prepare the Nodes for Your Network

A node is a computer that has become a link in a decentralized network and is involved in verifying and relaying operations and storing transaction history in the blockchain. Thus, in the Bitcoin network, a computer becomes a node after the Bitcoin Core blockchain is installed. A node with a working “Bitcoin core” is called a full node. It validates blocks, confirms, or cancels transactions, and transmits data across the network. Full nodes are independent of other nodes and maintain the stability of the blockchain.

Step 4: Define the Blockchain’s Internal Architecture

Now it’s time to plan the inner workings of your cryptocurrency infrastructure, the transaction format, network protocol, and consensus algorithm. If you decide to build your cryptocurrency on an existing blockchain, you’ll benefit from its architecture. Most blockchains have an immutable, proven, decentralized cryptographic architecture.

Step 5: Integration of APIs for Functionality

API provides a communication channel between nodes in the network and also helps make the software clear to end users. API integration plays an important role in ensuring the security and privacy of your cryptocurrency. APIs also enable collaboration within the blockchain, especially for transactions. Not all platforms provide application programming interfaces (APIs). Ensuring that a newly created cryptocurrency has APIs can help make it stand out and increase its popularity. Some third-party blockchain API providers can help with this step.

Step 6: Design a User-Friendly Interface

A well-designed interface attracts new users and makes it easier for them to interact with the product. Therefore, users choose a user-friendly and easy-to-navigate interface for their transactions.

Step 7: Navigate Legal Considerations and Compliance

The legality and regulations around cryptocurrencies vary by jurisdiction. Do not emit an asset if you are not in a crypto-friendly country. Digital money is allowed in about 100 countries, and banned in 17 states. The rest have not yet decided how to treat such assets. The optimum alternatives for issuing digital money include the United States, Australia, Singapore, Hong Kong, Estonia, Lithuania, Malta, France, and Canada. The White Paper should reflect the legal aspects of the project.

Costs and Considerations

The quotation to make your own cryptocurrency may vary depending on the complexity of the project and the required functionality. However, you should keep in mind that the process of creating a cryptocurrency is not only a financial investment but also serious work that requires knowledge, experience, and effort.

The Expenses of Creating Your Cryptocurrency

Launching your own cryptocurrency is not a cheap endeavor. The cost of the project depends a lot on the technical component. The quotation includes developing a blockchain, creating a unique algorithm, and learning cryptography. It is also necessary to develop a wallet for storing and transferring coins, create a user interface, and ensure the security of the system.

In addition, marketing and advertising costs should be taken into account to engage users to the new cryptocurrency. It is important to think through a strategy to promote and attract investors, as well as build an effective communication plan with the target audience.

The development cost may include customized design, necessary functionality, blockchain creation, integration with third-party services, etc. On average, the creation of a new cryptocurrency is $20,000-$40,000. At the same time, a simple token can be issued for $50.

Legal and Regulatory Aspects

Among the main disadvantages of digital money are restrictions in storage methods (only in special wallets, access to which will be impossible if the key is lost), the inability to cancel a transaction (in case of an error in the details, assets can be returned only with the consent of the recipient) and a ban in many countries. Do your best to keep your cryptocurrency within the legal framework. If you work within the law, it generates trust in the crypto community and promotes more investments. 

It may be necessary to use the services of a lawyer, as it will be difficult for a person without legal experience to take into account all aspects.

Deciding If It’s Worth the Investment

Cryptocurrencies have a very promising future. If you plan to run a successful and growing business for a long time, you should start by laying the foundation for your own cryptocurrency in the present. Just you have to remember that it is not an easy process. It may not be so messy to create a coin, but it is important to make it profitable. For this, it is necessary to increase the value of the currency, implement a promotion strategy, and convince users to participate in operations.

New cryptocurrencies can quickly take off, becoming promising, if they differ from existing ones by beneficial outcomes and originality. 

Conclusion

The processes described in this article may put the reader in a stupor and discourage enthusiasts from creating new cryptocurrencies. But do not jump to conclusions. Many people believe that to create your own cryptocurrency it is enough just to engage a couple of experienced programmers, write a primitive code, or copy the source code of an existing cryptocurrency, such as Bitcoin, Ripple, or Dogecoin, and the trick is done. In reality, this is not the case. 99% of such cryptocurrencies are doomed to fail and do not pay back the money to the investors.

If you have an ideo for a new cryptocurrency and you are secure of its value and visibility, your task is to find a team that can solve the whole list of tasks, starting from analysis and ending with the launch of the working version of the project.

FAQ

Can Anyone Create Their Own Cryptocurrency?

Unlike ordinary currencies such as the US dollar and euro, cryptocurrencies are not created by a country’s central bank. Any person or company can make a cryptocurrency because it is just software on the Internet. Now there are even special programs to use for crypto making very easily which is certified by currently existing 20,000 assets on the market. 

What Is the Typical Cost of Developing a Cryptocurrency?

An expert in cryptography and programming can develop a blockchain project and issue a fork of an existing cryptocurrency with their resources without spending a penny. If such a person decides to issue a token, he or she will have to pay a fee in the native coin of the ecosystem of choice. Ordinary users wishing to issue their own crypto coin or token can use third-party services that provide such services. The cost of the order will depend on the client’s requests.  

How Long Does It Take to Create a Cryptocurrency?

Subject to the level of difficulty, developing a cryptocurrency from zero can stretch from one to six months, while creating a basic virtual cryptocurrency using automated tools takes only a few minutes. However, modification of an available blockchain code will require profound technical expertise. Employing experts will reduce time, but you will have to cover the software development.

Disclaimer: Please keep in mind that the content of this article is not financial or investing advice. The information provided is the author’s opinion only and should not be considered as direct recommendations for trading or investment. Any article reader or website visitor should consider multiple viewpoints and become familiar with all local regulations before cryptocurrency investment. We do not make any warranties about reliability and accuracy of this information.