Crypto Frontline

How to Make your Own Cryptocurrency?

How to Make your Own Cryptocurrency?

How to Make your Own Cryptocurrency?
March 04
17:58 2018

Introduction

Probably this is a question a lot of people are asking we will explain the process in detail using this article. However, before we actually get into the exact steps, let’s make a short introduction in order to remember some of the basic terminologies that every one of you should understand correctly.

What is a cryptocurrency?

A cryptocurrency is a digital asset that does not have a physical form and which uses encryption for unit generation and transaction verification. It is an alternative form of money that was possible due to the appearance of the blockchain technology. With it, cryptocurrencies were able to be developed on distributed systems and people around the world could contribute with their own computational power to make the system function.

What is fiat money?

Also known as regular cash, fiat money represents the money that we use on a day to day basis. Fiat money is created through a financial system, formed of a central bank (which is a public entity, that controls the flow of money into the economy by influencing interest rates) and of private banks, which get funds from the central bank or other private entities. Those funds are then being lent to people or economic agents.

What is an Initial Coin Offering?

Initial Coin Offerings or ICOs represent funding activities, similar to the traditional IPO (Initial Public Offering) which helps startups to have access to funding. When a company that is based on the blockchain technology wants to get funding for its activity, it can do that from the crypto community. It develops a project, creates a new token (or cryptocurrency) and sells a part of the supply, in exchange for other cryptocurrencies or cash. By doing this, it obtains the necessary resources for the business development. Also, the people that have invested in the ICO can generate profits if the business evolves and the token valuation increases.

The beginning of the process

Now that we’ve discussed some basic terminology, it is time to get into the actual process of creating a cryptocurrency.

The first question you should ask yourself before deciding to do it is:

“Why do you want to create a cryptocurrency?”

This is an absolutely critical question and we assure you that most of the people that have already created some do not know an answer. You need to first think about a serious reason, why that cryptocurrency will be useful. To whom it will be useful? Why would someone mine it, or buy it, or use it?

There are many many other questions to answer, but first, try to think about the goal of your cryptocurrency. Money, no matter if we talk about fiat money or digital money, need to have a function and your cryptocurrency will need to have one, as well.

Find a community that you are addressing to. You do not just need to know why you need to create a cryptocurrency, but also know who will use it. Think about which people will find it useful.

Things that you will need to take into account as well:

  • Funding (Do you have enough money to fund the project, or you need to raise capital from the community?)
  • Knowledge (In order to create the cryptocurrency, you need to have advance knowledge about coding, security etc. You think you already have them all, or you need to assemble a team?)

In the following part of the article, we will begin to discuss the most important steps that you need to take in order to create your own cryptocurrency

  1. Assemble a team

You can handle everything by yourself, so you will need help from other people as well. If you don’t have advanced programming skills, then you definitely need some help. Your team should include programmers and security experts at least. If you can find people that have already been involved in order similar projects, all the better. Just keep in mind that they need to be paid, and their requirements will be relatively high.

  1. Design the project architecture

After you have assembled the team it is time to start working on the project itself. Each aspect should be discussed and set. You need to decide if:

  • You are using an already existing platform (most newly created cryptocurrencies are based on the Bitcoin or Ethereum platform) or you want to build a new one from scratch?
  • What should be the function of the cryptocurrency? Which problems does it solve?
  • How will the system work?
  • How will you obtain funding? (We assume you won’t have the necessary funds to finish the entire project)
  • The whole set of rules that will set how the blockchain functions
  • Regulation (even though there is no regulatory framework for cryptocurrencies at the present time, you will still need to take into account the legislation, since the project will be an actual business)
  • The ICO strategy, white paper, marketing etc?

Planning is problems one of the key steps in this process and the fact that there are a lot of newly created cryptocurrencies that fail should motivate you to take this step more seriously. You have to take as a long-term objective and understand from the start that it will take you years until the project will become successful.

  1. Coding

After the plan had been set, you need to start the coding process. Most of the newly created cryptocurrencies use the code of already-existing cryptocurrencies. The Bitcoin or Ethereum code is the most used. Also, we have to mention that the Ethereum platform is one the most popular for newly created tokens, since it allows developers to create their own pieces of code. From this point of view, the Ethereum platform is very flexible and offers some great features to developers.

A good place where you can find an open-source code for Bitcoin or Litecoin is GitHub. You could use it with trust, as it will surely simplify your work and reduce the time you will need to allocate for this phase.

  1. Make your project popular

In this phase, which can begin even before the coding part is over you need to start working on the ICO. As we’ve already mentioned, we assume that you won’t have enough money in order to complete the project, so you will need funding. An ICO is the best solution, but in order to make people invest in your project, you have to put into place some critical aspects.

  • The white paper of the projected should be edited. There you will include all possible aspects of the project, so people that are interested in the project can find what they need. Be 100% transparent and don’t shape the truth. If your project has a very important goal and can be useful for a certain community of people, there is very likely you will have some of them interested to invest in your project.
  • Build a website for your project or cryptocurrency, where you will have the white paper and all other details related to the project. Contacts of the team members and real identities are extremely important.
  • Advertise your project. There are a lot of dedicated forums where you can post about your project. Let people know what you want to do and see what feedback you can get from them. It is possible that you might get some negative feedbacks as well. That is not the end of the world. Since your project had not been yet launched, you can still make adjustments to the white paper, coding or other aspects without creating harm. Be as flexible as you can and put a huge amount of effort in this stage and people will not fail to become interested in your project.
  1. Mining power

If you want to design a cryptocurrency that can be mined, then you will need a certain amount for the pre-sale. Those coins will be sold to investors and you will get funding in exchange. However, those coins need to be mined, so you need mining power for that. You and your team could handle that since at the beginning the mining difficulty is very low. However, if you need help, you will most likely find it on forums online community, in order to get the job done.  Once you have the mining power, you can mine the necessary coins for the pre-sale and the ICO can start.

 

Useful tips for the cryptocurrency creation

Tip #1 Think like a hacker does

If you want to build a good cryptocurrency you and your team must think like hackers do. You need to do so in order to find out the flaws of the system and correct them before the project goes live. It is absolutely critical to do that and the most famous Bitcoin thefts, combined with other exchange hacks can motivate you further. You will be working online and the internet can be tricky. Put security on your list of top priorities and you will manage to avoid a huge number of problems.

Tip #2 Test before you apply

You should do a lot of testing before the project begins. The code must work swiftly and all unwanted errors should be corrected. Once the project is running, any error can damage the activity seriously. That is why you need to ensure you’ve taken everything into account.

Tip #3 Be flexible

You won’t manage to come up with the best ideas from the start. Also, your ideas could be wrong and in this kind of situation, you must be open-minded enough to listen to other people’s opinion. That’s not an easy task to do, without a doubt. Your personal approach will influence the project in many ways, so make sure you are flexible enough.

Summary

Before we end this material let’s sum up some of the most important aspects we’ve discussed. Firstly, if you really want to create a cryptocurrency you really have to think about why you want to do it. You need to think about its functionality and what problems it can solve. If you really want to make it successful, then you have to take this into account. Secondly, you need a team of smart people to work with. You won’t be able to do everything yourself, so make sure to gather a smart and enthusiastic group of people before you actually start the project.

After you’ve gathered the team, planning is the next important step you need to take into account. You won’t manage to think about everything and some things will come along the way. But if you do this preliminary planning as good as you can, you will manage to avoid a lot of mistakes that others have done.

The last part of the situation is when you actually create the system, the blockchain, set up all the rules, test them to see if they are working good etc. Lastly, the ICO phase, when you are able to get funding from the community, in exchange for the coins that have been pre-mined.

We know that the process is more complex than you though, but if you really want to do this, you have to take all the steps we’ve mentioned. If you managed to read all the material and you are still wanting to create your own cryptocurrency then all the best!