Create your own cryptocurrency
From physical to a digital currency, the world is changing and moving towards better ways of living. Even though the idea of digital currency is still new to the common man, the markets are flooding with it. The world market is gradually stirring toward a more sophisticated digital ecosystem. The latest and very trending topic in the digital world today is the word called ‘cryptocurrency’.
A cryptocurrency is nothing, but a digital currency used as a medium of financial transactions.
You may be well aware of the famous cryptocurrencies Bitcoin, Ethereum and Ripple but those are not just the ones. Actually, there are thousand such more coins and tokens offered in the market today. Did you know that anyone can create their cryptocurrency with the right information and skill?
As of August 19, 2018, there are more than 1600 cryptocurrencies and they are growing with each passing day. So, should we follow the fashion and produce our own cryptocurrency?
But, wait, before we start understanding the process of creating own cryptocurrency, here are three important pointers that you need to remember.
- Need for a good concept: Creating a token or coin in the interest of creating is expected to fail. It needs to add value and most importantly, a purpose to the digital currency.
- Gaining people’s confidence: For doing this, you need to create a ‘community’, which will follow your cryptocurrency. Maintaining a community is not easy but it is very significant hence be cautious about this.
- Need for crypto safety and coding familiarity: You can hire the developers for this but still you need to know and understand how your cryptocurrency will work.
By the end of this guide, you will get to know the benefit of having a purpose to your coins or tokens, earning the trust of people etc. So, should we get started?
How to get started with your cryptocurrency creation?
The actual ‘let’s get started’ begins with your concept, which we will look at, in the coming sections. First of all, let us look at the basic ways of creating a cryptocurrency. There are two basic ways for this:
- Create your own blockchain, this has its own coin.
- Using Ethereum or an equivalent platform to create the application, this has its own token.
Just to make clear, both coins and tokens are cryptocurrencies. The mere difference is that a coin is owned by its own blockchain while a token is created on an existing blockchain. Hence, the first thing to start is to choose if you want to produce a ‘token’ or a ‘coin’. In other words, you want to make a fresh start? Or you want to use a trusted platform and build a token on it?
The tokens which are built on Ethereum are also called ERC-20 tokens. Ethereum is the most trusted blockchain for creating tokens because it was the first one to offer token creation and it has earned the trust of the people.
Developing a Coin Vs developing a token:
|It has its own blockchain||It is developed on an existing blockchain|
|It is very high-priced||It is affordable|
|The development takes a lot of time||The development takes less time|
Settling on whether you need a coin, or a token is a big selection because it analyzes a lot for your cryptocurrency project, including your budget for the project. For creating a coin, not only will you need a big budget but also a team of experts who can design the blockchain and the coin for you.
Despite that, if you don’t want your own blockchain development technology, you can simply create ‘tokens’. Like this, instead of creating your own blockchain technology you can use the existing blockchain and just develop an blockchain application development technology which runs on an existing blockchain Like NEO or Ethereum.
Obviously, creating tokens and a decentralized app will still need a lot of time, budget and an experienced team of developers. Still, this is a better and cheaper way compared to creating your own coin and a blockchain.
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The next step – Initial Coin Offering:
When an organization decides to proclaim themselves as a public organization, on the stock market, they offer an Initial Public Offering. Initial Public Offering is a way to create funds in compensation for shares.
Appropriately, Initial Coin Offerings (ICOs) are very alike. ICO is how blockchain-centered organizations create funds for their cryptocurrency ventures. The only difference is that rather than buying shares, the investors purchase the ‘tokens.
A fascinating fact is that since creating a cryptocurrency is costly, hence ICOs can be extremely useful. Also, the crypto world is gaining a lot of popularity, so this could be the best time for you to begin one!
Achieving trust of investors plays a very vital role in the prosperity of an ICO. The best ICOs have the best development experts and a well-crafted roadmap. By understanding the roadmap, the investors can understand what the plan is, what the project wants to achieve and how will the funds be used.
Before we start digging in cryptocurrency building, let us make some very basic assumptions.
- You are not a millionaire to develop your own blockchain development technology.
- You are inclined to taking the simplest route and create a decentralized app and token by using the existing blockchain technology.
ICOs are a fast way to create funds for your crypto project but it’s not easy. To successfully launch a new cryptocurrency with the support of an ICO, the following is what you have to do.
The center point of your project is the vision, the idea! You need to strongly call out how will your decentralized app help the industry verticals that you want to target. Are you looking solve real-world problems for education, finance, e-commerce etc.? Are you looking to remove the third-parties like banks, brokers etc.?
Hence you will need to study in-depth and find out what are the real-world problems that can be solved by blockchain technology and attract investors. Think about it this way that why will an investor be interested in investing if you have nothing to offer? For this reason, add value if you want to create value.
Some of the industries that can implement blockchain via decentralized app include Finance, Healthcare, Content services, agriculture, digital payments etc.
The expertise in development:
Selecting the right team of developers for the token and smart contract can draw the line between prosperity and debacle. Hence it is important to choose the right team which has an ample amount of experience in this.
The vision can’t be turned into reality if you don’t have the skill required. Hence, I would suggest hiring people who have worked on at least three or four blockchain projects. One way is to get engaged in blockchain communities by going for conferences and events; thus, engaging with people. This will support you find the exact team for your venture.
The Smart Contract:
A smart contract plays a massive role in your project. Just in case, if you are not aware of what a smart contract is, here’s a basic introduction. A smart contract resembles a traditional contract; excluding that it is a digital one which works on the blockchain, executes on its own (automatically) and can’t be altered.
In it, rules are listed and there’s no involvement of any mediator. People feel safer with a smart contract because it is nothing but a code and if the code is correct there’s no way of fraud. This gives people an assurance that the due money will be received at right time.
The rules of this smart contract will be coded by your experienced developers. You can read more about smart contracts and understand it in and out.
An old hand external audit:
In order for people to trust your code i.e. your smart contract, they first need to know if it is safe or not. Hence, comes the need for an efficient audit. This will not only make the investors feel safe but also, you can feel safe. Will you spend money on a token and smart contract which is vulnerable to attack?
This is a primary step to prove that your project is ‘legitimate’. Such audits are often referred to as ICO security audits and there are ‘authentic’ companies who do such audits. Getting the right audit done, will help in the promotion of your cryptocurrency because it shows that you stick to industry standards and data security regulations. It adds value to your scheme and is a critical step!
An elegantly written Whitepaper:
To launch a cryptocurrency, it is very important to have an appealing whitepaper written for the same. Because it is the means of attracting investors or to say the other way, the means for investors to judge and verify your scheme. It will be senseless to launch your cryptocurrency without a whitepaper and hence you have to be cautious while launching the ICO. Documenting a whitepaper should be one of the leading causes.
Following are some basic queries that your whitepaper should undoubtedly answer.
- What is the philosophy of your scheme?
- What is the solution that you are proposing?
- How do you plan to use the ‘gathered’ funds?
- A date for releasing and listing of your tokens?
- Timeline of the scheme and completion?
- Short portfolios of the team, their expertise, and their past accomplishments.
Marketing your ICO:
Now that all the above-mentioned steps of vision, team, smart contract, and audit are done, it is time to think about the marketing strategy of your ICO.
You need to create funding and trust for your ICO from a trustworthy community. For this, you will require a website, a perfect domain and a notable social media presence. There are a plethora of tools for marketing and sales that can assist you to attain this objective.
- Social media: Depending on the objective of your scheme, you can use any one of LinkedIn, Twitter, Facebook, Instagram, etc. If you are skilled in this, you can do this yourself or you can hire people for it.
- Newsroom as in Press: This is a great way of getting the credibility for you ICO. If a good number of articles are published on widely-known sites like Forbes, Business Insider, etc. your ICO will become trustworthy without a doubt.
- Blogs: You can post on sites or your own website’s blog, but you should post consistently, and the post should be relevant to your scheme and its progress.
- Email Marketing: This is another way to keep investors in the know with your scheme and the happenings. For this, you need to gather the email addresses of the potential investors and there are different ways of doing this. Inserting a newsletter sign up is the most suitable one. This way your email won’t end up in a ‘SPAM’ folder.
Managing the community:
You will need a community where people could discuss and ask you questions. Telegram is one such known app for managing communities. This will help you endorse good communal engagement and association with your investors.
I hope that I have cleared the air for both technical and non-technical domains. But remember that your scheme will succeed only if you have a good vision, a good plan, and a good team to turn your vision into a reality. Many cryptocurrencies fail to attract investors because either the vision is missing, or they don’t take the right efforts in planning or they don’t have a good team.
Again reiterating, if you don’t have the investor’s trust, your ICO is set to fail.
Harsh Arora is a Content Consultant at Enuke Software, a pioneering Blockchain, and Mobile App Development Company and Blockchain Development Company in the USA. Harsh is passionate about the start-up ecosystem, Cryptoworld, entrepreneurship, latest tech innovations, and all that makes this digital world.