The idea of owning a crypto token or creating your own cryptocurrency is like having your identity on a digital legal tender. With the traditional legal tender, it is not possible due to government policies and regulations. However, apart from decentralisation, the crypto industry offers features like freedom to create your own currency.
The thought of producing your own crypto asset is quite fascinating but the challenge is how to create it, wherein handsome profits can be earned.
This article explains the need, fundamentals and the process to create your own cryptocurrency,
Why to create cryptocurrency?
There are numerous advantages for entrepreneurs and developers in developing a cryptocurrency. For some developers, the aim is to address functional hurdles by creating specialised digital currencies. Others such as DeFi enthusiasts would require creating a more advanced payment network or other forms of decentralisation.
For crypto entrepreneurs, the goal of generating revenue through initial coin offerings (ICOs) or token offerings is marketable. Some people and businesses can bypass conventional finance with its restrictive controls.
For many, such as technologists, innovative opportunities in the field of blockchain technology development are attractive as they allow the creation of scalable, secure and eco-friendly cryptocurrencies and overcome shortcomings of existing digital currencies.
Prerequisites for creating crypto asset
Before creating and launching your own cryptocurrency, you need to have an idea about what the process will be. It starts with designing from scratch and ends at the launch of the cryptocurrency. Followings are some prerequisites that must need to be checked before getting started with launching your own cryptocurrency;
Define your objective
If a person launches a crypto project, it doesn’t mean he wishes to discontinue investing in Bitcoin, Ethereum or any other crypto. Sometimes, you want engagement with an active crypto community or generating a private payment system. Cryptocurrencies, for instance, are considered the best source of raising funds and increasing brand awareness or offer an accessible reward program.
Hence, a well-defined goal will assist you in determining the project’s scope and selecting the most effective strategy.
Choose and use a consensus algorithm
The consensus mechanism of a blockchain is an integral part of its operational system. Proof-of-stake (PoS) and proof-of-work (PoW) are the two most popular consensus techniques.
Proof-of-Work: Several participants, also known as miners, compete with one another to validate a transaction via the PoW consensus method. They accomplish it by carrying out intricate cryptographic computations. The first miner to finish these computations successfully receives a token or coin. PoW is a dependable option for many Bitcoin networks because of its well-known strong security features.
Proof-of-Stake: In contrast, the PoS consensus technique employs a distinct methodology. Here, the participants referred to as validators, must stake a specific quantity of cryptocurrency resources. The probability of a participant to be selected to validate transactions as a validator and add new blocks to the blockchain increases with stake value. However, a validator has the risk of losing his share if they commit any mistake.
Anyone wanting to create a crypto asset needs to make this critical decision regarding the selection between these two methods. PoS provides a more sustainable and environmentally-friendly method even though PoW is known for its strong security. You can also use a customised consensus algorithm which suits the objectives of your crypto asset.
But, if you launch a cryptocurrency as a token on an existing blockchain network, it’s not necessary for it to have a consensus mechanism.
Create, choose or modify an existing blockchain
While it is possible to create your own blockchain from scratch, developers have the choice to use the existing blockchain or modify it for launching a cryptocurrency. However, there are simpler methods for making your own crypto. You have the option of using pre-existing blockchains or obtaining the source code of an open-source blockchain project and using it as the foundation for creating your own blockchain.
The choice you make in the final step will determine which blockchain to use. Currently, the most popular blockchain networks for launching a cryptocurrency are Ethereum and Solana.
Have a wallet address
It is one of the most important aspects of owning a cryptocurrency. This is because without a wallet address, you will not be able to access any blockchain network. In addition, people will not be able to interact with the platform or the crypto asset without a wallet.
Also Read : Crypto Wallets: All You Need To Know About Their Types
Process to create cryptocurrency
A cryptocurrency can be launched via two main methods; (i) launching a custom smart contract and (ii) developing your own blockchain platform. Let’s understand both thoroughly;
Launch token smart contract
To create your own cryptocurrency on existing blockchain, we need to code a smart contract. Smart contract is a program that will have all the essential details about our cryptocurrency like its total supply, security features, minting features and much more.
Smart contracts can be launched on a blockchain network through different methods. Platforms like Remix.org and Hardhat allow developers to create, test and deploy smart contracts easily. Method to introduce a smart contract has following steps:-
Step 1: Define token properties
Determining the token’s essential characteristics is the first stage in the creation process. This comprises the name of the token, symbol, total quantity, and the number of decimal places it can have.
These characteristics not only define your token’s fundamental identity but also reflect how it will behave in the market and what the cryptocurrency investors think about its potential. It is essential to carefully evaluate these features in order to match your token’s target market and intended use.
Step 2: Choose an existing blockchain
Many parts of the development process gets simpler when your new cryptocurrency token is created on an existing blockchain. It enables you to take advantage of the chosen blockchain’s well-established infrastructure, security, and community.
Choosing a blockchain that meets the requirements of your token in terms of transaction speed, cost, and technological capabilities is a crucial task. It’s a calculated move that may affect the usefulness, accessibility, and future growth prospects of your coin.
Step 3: Develop a smart contract
The foundation of your token is made up of smart contracts, which automate its functions and guarantee that transactions are carried out in accordance with predetermined guidelines. These contracts can widely range in complexity, from simple and clear transactions to complicated decentralised applications (dApps).
A thorough understanding of blockchain technology and programming languages, such as Solidity for Ethereum-based tokens, are necessary to create a smart contract which is both safe and effective.
Step 4: Test the token
Testing your token on a testnet is an important step before formally launching it. With testnets, you may mimic transactions and interactions with your token in a secure setting without worrying about losing real money.
This procedure assists in locating any possible problem or weak point in your token and smart contract. Thorough testing guarantees that your token functions as planned, giving users a safe and easy experience after it goes live.
Step 5: Deploy token contract
Deploying token cost fees, which differ according to the blockchain network you select, is required to cover the computational costs of deploying your token and smart contract to the blockchain.
This step is the last commitment to release the token. Once finished, your token is a live digital asset that is ready for usage and distribution, not just a concept or a project.
Launch own blockchain project for crypto payments
Launching your own blockchain is like having an idea and turning it into reality. Introducing a blockchain project requires a strategic blend of technology and an active community. To launch your own blockchain, there are various steps.
Step 1: Blockchain purpose
Stating your purpose, issue you wish to resolve and the significant impact on your blockchain project are needed. This clarity will appeal to investors and possible users.
Prepare a detailed ‘White Paper’ and roadmap outlining the goal of your project planned to be accomplished in the specified time. In addition to security assessments and technical features of your project’s token, you should reveal tokenomics, team members, and token allocation at this early stage.
Step 2: Token design and minting
Describe the tokenomics, including the ecosystem’s utility, distribution plan, and overall supply. A crucial choice that significantly affects a blockchain functionality is whether to use PoS and PoW, or any other consensus mechanism. PoS requires players to stake a specific number of tokens in order to have the opportunity to validate transactions, whereas PoW depends on processing power to do so.
Step 3: Strong foundational and tech team
Your development team’s cohesiveness and level of experience will determine how well your project turns out. You should gather people with a range of expertise in blockchain design, security, and smart contract development. Blockchain engineers with proficiency in languages like Rust (for Substrate-based networks) or Solidity (for Ethereum) are extremely useful.
Ensure that the team is updated with advancements in the blockchain industry, consensus processes, and the complexities of decentralised systems.
Step 4: Perform security audits
Make security a top priority by thoroughly auditing your smart contracts. Deploying your smart contracts to the blockchain should only be done after proper testing as these contracts represent a project’s actual strength.
Also Read : Top 5 Most Undervalued Layer 1 Blockchain Projects 2024
Is it legal to create your own crypto asset?
Well, now that you have a step-by-step process to create your own crypto asset, you might be wondering whether it is even legal.
Yes, it is a legal process. However, there is a need to strictly adhere to crypto rules and regulations. Besides, the cryptocurrency market is still a grey area, and some companies have already ventured into creating their own crypto, and so you can.
Conclusion
Entering the crypto industry and creating your own currency can turn out to be a profitable decision. However, you should be aware of the risks and stages involved before you start the process. Making a well-informed choice is necessary.
It is advisable to work with those crypto developers that can offer the know-how required to design and introduce a lucrative cryptocurrency while guaranteeing that all technical and security requirements are satisfied in order to successfully traverse this complicated terrain.
