Anybody can create cryptocurrency since it is essentially a decentralized system. So if you are a company or startup considering the release of your own cryptocurrency, it’s possible as long as you are equipped with the right technical team that knows the ins and outs of tech and the right infrastructure. Opportunities abound when you get immersed in the world of cryptocurrency by making your own crypto coins. But aside from knowing how to create a crypto coin, it is also best to first evaluate if your business would truly benefit from one.
Cryptocurrency: Coin And Token
Certain terms in cryptocurrency are used interchangeably, but it is good to define them and see how they differ before we learn the basics of creating. We often hear the terms crypto coin and crypto tokens passed around in conversations, forums, and information exchanges. What are these? Are they one and the same? If not, how similar or different are they from each other? To clearly highlight what these terms are and where they factor in the whole cryptocurrency structure, it may be good to go back to ‘the beginning’, even before crypto.
Let’s start with ‘currency’. The word currency is a means of exchange that is universally accepted to facilitate the transfer of goods and services from buyer to owner. A currency is represented by banknotes, bills, and coins as tangible expressions of exchange. On the other hand, ‘cryptocurrency’ is a type of currency that is digital and thus does not have physical bills or banknotes, or metal coins. What it has instead are digital coins called crypto coins.
Crypto coins need their own blockchain – a network of digital transaction records which we will learn more about later – and can be used anywhere, for purchase, payments, or investment. It works like real money.
Now there also are crypto tokens, sometimes confused as crypto coins. There’s a big difference. If a crypto coin has to have its own blockchain to work, a token does not need one and can work when used in existing blockchains. Like a token of a specific arcade or a specific store’s gift certificate, crypto tokens cannot be used anywhere except on a specific project.
Creating A Blockchain
How to create a crypto coin is dependent on a much larger initial task of creating a blockchain. Here are steps on how to get started on that blockchain:
- Define your blockchain objectives to determine your use-case. Your use-case could be data authentication and verification, facilitating smart contracts, or smart asset management. Choose what suits you and your strengths, as well as your company’s philosophy. It is best if they match.
- Establish protocols by choosing a consensus mechanism. A consensus mechanism is a set of protocols that will direct your blockchain and its nodes to have a standard response to transactions.
- Select a blockchain platform based on your preferred consensus mechanism. There are many blockchain platforms available, the most popular of which is Ethereum. Here’s a quick list of the other best-known platforms that you can consider choosing from Waves (WAVES), NEM, Nxt (NXT), BlockStarter, EOS, BitShares 2.0, CoinList, Hyperledger Fabric, IBM blockchain, MultiChain, HydraChain, BigChainDB, Openchain, Chain Core, Quorum, IOTA, KICKICO.
- Start designing the nodes. The nodes are the units that make up a blockchain. Each node is an Internet-connected device that does different tasks like processing transactions or storing data, which all add up to the bigger job of the blockchain, depending on its use-case. The nodes then, as building blocks of the blockchain, allow for smooth and efficient operations, support, and maintaining security. Nodes could be private, public, or hybrid and vary in terms of the required hardware.
- Set up your blockchain’s internal architecture. You have to be one hundred percent sure of how this structure of support will look like because once the blockchain platform is operational, this can no longer be changed. In other words, once the blockchain is ‘enfleshed’, its ‘bones’ can no longer be dismantled and changed. So before you decide on the structure, be sure to secure these areas of concern:
- Permissions – Who can access the data? Who can make transactions? Who checks them and validates them?
- Address formats – What will be your blockchain addresses?
- Key formats – These keys are designed to generate signatures for the transactions.
- Asset issuance – How will the creation and listing of all asset units be done? What rules will govern this aspect?
- Asset re-issuance – What rules will govern the re-issuance of assets or the process of making more asset units available?
- Key management – How will the private keys for blockchain access be stored, secured, and protected?
- Multi signatures – How many keys will be required for the validation of a transaction in the blockchain?
- Atomic swaps – How will smart contracts for cryptocurrency exchange look like?
- Secure the APIs. If your blockchain platform does not have a pre-built API yet, check and choose from a good number of API providers available. Many providers have proven track records for their credibility. Just a few of them are ChromaWay, Bitcore, Neuroware, Tierion, Gem, Coinbase’s API, Colored Coin APIs, Blockchain APIs, Factom Alpha API, Colu, BlockCypher.
- Design your Interface. In this step, you design the smooth communication flow between the blockchain and the users by having a look at web, mail, and FTP servers, external databases, and programming languages to use.
- Finally, be sure to legalize your cryptocurrency. Making your cryptocurrency legal is a crucial step for your security. But after all, the logistical hassle of this process, having a legal seal on your cryptocurrency will easily show a vote of confidence in your business and your cryptocurrency endeavors. Learn more on how to create a crypto coin here!
It may take a lot of work to learn how to create a crypto coin and the blockchain it sits upon, but this could be a good opportunity for your startup to get ahead of the competition. Having your own blockchain gives you an edge as it also communicates the effort of eliminating fraudulent transactions to make your users and clients feel secure with their transactions with you. As blockchain technology and digital currency become increasingly recognized, being an early adopter will surely open up your business to perks, incentives, and goodwill.