There are many reasons for creating your own cryptocurrency, from raising capital to cutting out go-betweens in daily transactions.
However, there are a lot of factors to consider, and the process can seem complicated and overwhelming.
Don’t worry! We’ve put together this step-by-step guide on how to make your own cryptocurrency to help answer your questions.
Related: Four Kinds of Blockchain Structures – Which is the Best For You?
Ways to Create a Cryptocurrency
There are typically three ways to create a cryptocurrency, and they all take time and effort to implement.
Creating Your Cryptocurrency on a New Blockchain
You can create a new blockchain that supports its own native cryptocurrency. However, this method is complicated and requires excellent coding skills, an in-depth understanding of blockchain, and strong technical skills in cryptocurrency.
While this might be the most challenging method to create your own cryptocurrency, it will also give you the most freedom for customization.
The result of this method is you will have created a native coin because it is different from every other crypto coin. Native coins are more highly regarded than tokens because they have been created on a new blockchain. You also have no limit to how many coins you want to issue.
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Forking an Existing Cryptocurrency
There are many open-source cryptocurrency codes you select from to build and modify your cryptocurrency. You can find open-source codes on sites like GitHub.
While this method is less complex than building your own, you will still need strong development, technical, and cryptocurrency skills to produce your design.
You will also need professional and legal advice to ensure you don’t break any rules and laws. You’ll also need a unique value proposition to make it attractive and viable to users.
After the auditing process and when you have the legal clearance, you can start marketing and minting your coin.
Creating a New Cryptocurrency on an Existing Blockchain
If you don’t have the technical skills to build your own blockchain, you can create your cryptocurrency on an existing blockchain.
Many blockchains will allow users to build their cryptocurrencies without affecting others already running on them. These types of cryptocurrencies are called “tokens” or “altcoins” because they are not native to the network.
The basic steps for creating a new cryptocurrency on an existing blockchain platform are as follows:
- Choose the blockchain platform
- Create and develop your token or altcoin
- Start minting your new cryptocurrency
Depending on the blockchain platform you choose, you may also need the approval of auditors and lawyers before you issue a batch of tokens.
Seven Steps to Make A Cryptocurrency
Here is one step-by-step method for making a cryptocurrency.
1. Define the Concept of the Cryptocurrency
A promising cryptocurrency requires a strategic plan to survive and thrive as a business. It should solve a real-life problem that investors can buy into and purchase the coin.
Whitepapers are a great way to discuss the proof-of-concept of the issues your coin is addressing and resolving.
2. Choose the Method of Development
Your cryptocurrency or token needs a place to reside, so choosing the blockchain environment is critical.
As we mentioned above, creating and coding a cryptocurrency yourself can be very challenging and take a lot of time to develop and implement. But it offers the most flexibility and freedom and results in minting a native coin.
Forking an existing cryptocurrency requires slightly less technical skills but requires auditing and legal reviews before minting.
You can also create a token or altcoin on an existing blockchain if that suits your needs best.
3. Select a Consensus Mechanism
A consensus mechanism is a set of rules that decides the legitimacy of contributions made by the nodes or transactors of a blockchain.
There are many different types of consensus mechanism algorithms, including:
- Proof of Work (PoW)
- Proof of Stake (PoS)
- Proof of Capacity (PoC)
- Proof of Activity (PoA)
- Proof of Burn (PoB)
- Proof of History (PoH)
- Proof of Elapsed Time (PoET)
These smart contract rules define the guidelines and speed of blockchain transactions. However, once you establish and launch them, you cannot change them.
The consensus mechanism is typically announced during the initial coin offering (ICO).
Related: What Is a Crypto Token? Definition & FAQs
4. Launch an Initial Coin Offering
The ICO is the first part of the marketing plan for your cryptocurrency. It should involve essential industry players, brokers, the media, and users.
You’ll want to promote the ICO through every means available, including e-mail, social media, blog posts, and advertising, to attract users to your cryptocurrency.
5. Mine Your Coins
You’re going to need to mine your coins so that you can have them available for distribution. Hopefully, after promoting your cryptocurrency, interest will surge, and demand will be strong.
It’s critical to be sure to keep your mining up with the needs of your users. Then, you can begin mining during your ICO.
6. Build a Community For Your Coin
There are many platforms like Reddit and Discord that you can use to build a community. The community is crucial because it’s an interactive platform where your users can communicate, ask questions, and discuss best practices.
Communities also let you connect with investors and answer any questions they may have.
7. Audit Your Cryptocurrency and Get Legal Counsel
Using an external auditing company that is trusted industry-wide with a solid reputation will give your cryptocurrency a stamp of credibility. A positive audit will also help give investors an incentive to buy into your concept.
Legal counsel is recommended to help research the complex regulations and laws surrounding cryptocurrencies. They can also keep you up to date on the legality of your cryptocurrency as the regulatory landscape changes.
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Making a Cryptocurrency Is Well Worth the Effort
While making a cryptocurrency might seem daunting, you can do it if you do your homework and do the due diligence.
Once you have an idea or an innovation that uniquely solves a real-world problem, it’s time to figure out the development method. Again, the more you and your developers can handle in-house, the more customizable and flexible your cryptocurrency can be.
After you select a consensus mechanism, you can launch your ICO and start mining your coin or token. Next, build a community for cryptocurrency users to connect and communicate.
Work with a trusted auditor and legal team to ensure that your cryptocurrency is compliant and legal.
In the end, you can have a cryptocurrency that is uniquely yours, and you can share it with the world.
