How to Create a Cryptocurrency

amam4 (25)in #msgc • 6 years ago

You might have heard of Bitcoin or Ethereum, and maybe even Ripple, but in fact there are over a thousand different coins and tokens available.

In fact, according to Wikipedia, there are over 1,384 cryptocurrencies in use worldwide. That’s a lot of crypto!

So, why not add to the pack? Well, you might be able to after I teach you how to create a cryptocurrency.

Before we get started though, there are three things you need to know:

How to Create a Cryptocurrency

YOU NEED
A GOOD IDEA
Building a token/coin for the sake of building a token/coin is doomed to fail. It needs to have purpose (it needs to add value to the world).

How to Create a Cryptocurrency

YOU NEED TO EARN
PEOPLE’S TRUST
To do this you need to build a ‘community’. This is a following for your cryptocurrency. Maintaining a crypto community is hard work, so pay a good amount of attention to this point.

How to Create a Cryptocurrency

YOU NEED CODING & CRYPTO SECURITY KNOWLEDGE
Yes, you can hire ‘talent’, but you need to understand how your token/coin is going to work.

By the end of this guide: you’ll understand the basics of how to create a cryptocurrency, and the importance of building trust with the people who support your cryptocurrency!

This guide will also help you understand how important it is to have a good idea and purpose for your crypto (and why you’ll need a lot of spare cash to help fund this project!).

So, if you want the answer to the question, “how to create a cryptocurrency”: read on! Welcome to my how to make your own cryptocurrency tutorial!

Table of Contents [show]

How to Create a Cryptocurrency: How to Get Started
The real ‘getting started’ begins with your idea, but we will get to that later. First, let’s talk a bit about technology.

There are two primary ways of creating a cryptocurrency:

Build your own blockchain — this will have its own ‘coin’
Use NEO, Ethereum or a similar platform to create an application — this will have its own ‘token’
So, the first thing you need to decide is whether you’re going to build a “token” or a “coin”. Are you going to start from scratch? Or build a token on technology that is already trusted and available?

Coins and tokens are both cryptocurrencies. The difference is: a coin belongs to its own blockchain, whereas a token is built on an existing blockchain. So, there can be thousands of tokens built onto a blockchain, whereas there can only be one coin.

Here are some of the most popular coins:

How to Create a Cryptocurrency

Some of these blockchain technologies can be used to help create tokens. The most popular blockchain for building applications and tokens on is Ethereum.

Ethereum vs NEO: The Most Popular Choice for Tokens
How to Create a Cryptocurrency
ETH
✓ Native Virtual Machine
✗ Runs on Proof of Work mining until
for Proof of Stake network upgrade
✓ Average desktop wallet
✓ Quality 3rd party options
✓ Hardware wallet

How to Create a Cryptocurrency
NEO
✓ Native Virtual Machine
✗ Node, delegate and voting systems
currently incomplete, future plans unkwown
✓ Average desktop wallet
✗ Minimal 3rd party options
✗ No hardware wallet

The tokens built on Ethereum are called ERC-20 tokens. The Ethereum blockchain is a great playing field for token makers because the Ethereum blockchain was the first to offer this service and is very well trusted.

NEO is very similar, but instead uses the NEP-5 standard token, and allows people to use the NEO blockchain to create applications and tokens. It is the second most popular platform!

Ethereum may have the trust and popularity advantage, but NEO has an advantage of its own. On NEO, you can build with many different programming languages, including C++ and Java. On Ethereum, you can only build using Solidity (Ethereum’s own programming language).

This means that developers using NEO do not have to learn a new language, and instead can use a language they are already familiar with.

So, which would you prefer? If you’d like to use Ethereum, you’ll need to learn Solidity. If you use NEO, you can use a pre-existing language that you may already be familiar with.

The good news is: Solidity doesn’t have to be difficult to learn. It was designed to be similar to Python, JavaScript and C++ to make it easier to learn.

Plus, we have our own interactive Solidity training course that teaches you the language by showing you how to create your own Solidity game step by step. It’s a new, fun way to learn: it’s called Space Doggos.

How to Create a Cryptocurrency: Building a ‘Coin’ vs. Building a ‘Token’
How to Create a Cryptocurrency

COIN:

✓ Has its Own Blockchain
✗ Very Expensive
✗ Takes a Lot Of Time

How to Create a Cryptocurrency

TOKEN:

✓ Built On An Existing Blockchain
✓ Not Expensive
✓ Doesn’t Take a Lot Of Time

Deciding whether you need a coin or a token is a big choice: it determines a lot of things for your project, including the amount of money you need to spend.

Creating a coin (which requires building a blockchain from scratch) is very expensive and takes a lot of time. You also need an amazing team of developers!

However, if you don’t need your own blockchain, you can just create a token. This way, rather than building your own blockchain, you can just build an app that runs on an existing blockchain — like Ethereum or NEO.

Yes, creating a token and app (dApp/decentralized application) does still require a lot of time, money and a great team of developers. But, it is much easier and cheaper to do than creating a coin/building your own blockchain!

How to Create a Cryptocurrency: Initial Coin Offerings (ICOs)
When a traditional company decides to go public on a stock exchange, the company offers an Initial Public Offering – which is a way to raise funds in exchange for shares.

Well, Initial Coin Offerings (ICOs) are very similar. ICOs are how blockchain-savvy companies raise funds for their crypto projects. But instead of the investors buying shares, they receive “tokens”.

INTERESTING FACT
Creating a cryptocurrency is costly, so ICOs can be very, very helpful. And because the crypto sector is currently very popular, now could be a great time to start one!

Gaining trust plays a huge role in the success of an ICO. The most successful ICOs are the ones that have a strong team of developers/founders and a solid roadmap. A roadmap tells investors what the project plans to achieve in the future, and how they plan to use the funds.

Now, let’s take a deeper look at how to create a cryptocurrency. But first, I’ll make some assumptions.

You don’t have millions of dollars in the bank to create your own blockchain cryptocurrency “coin”
You’d rather take the easier route and create dApp and token by building on an existing, trusted blockchain
So, I’ll stick with the less technical, less expensive and less extreme version of how to create a cryptocurrency. Here’s how to create a ‘token’.

How to Create a Cryptocurrency: The Beginning
ICOs offer a quick way to raise funds for your project, but it won’t be easy. To successfully start a new cryptocurrency via an ICO, here is what you’ll need:

A ‘big idea’ — how will your blockchain project help a specific industry? What problem will it solve?
A strong development team to create your ERC-20 or NEP-5 tokens
A strong development team to create your ICO smart contract — when users send crypto to your smart contract, the smart contract sends the right amount of your token to them
A professional external audit — this is to check that your token and smart contract are secure so that you don’t get hacked
A well-written whitepaper — this is a document that presents your idea, the problem it solves, its roadmap and how it works/the technology it uses
A marketing campaign — website, social media, pre-&-post-sale community development, forums and media
A community management team
Let’s look at why you need all these things to create a successful cryptocurrency project.

How to Create a Cryptocurrency: The Big Idea
This is the center of your project! You need to think about how your dApp will help in the industry you’re targeting. Are you planning to remove a current middleman (like a bank or a broker)? Are you looking to solve real-world problems (such as poverty or lack of education)?

You need to think about a real problem and how blockchain technology can solve it. If your project has no real benefit, then why will anyone want to invest or use it? If you want to create value, you must add value.

Here are some industries that might get your brain flowing with ideas: File Storage, Content Services, Insurance, Marketing Peer-to-Peer Communications, Finance, Medical and Energy/Electricity. All of these industries can be helped massively using blockchain technology via dApps.

How to Create a Cryptocurrency: The Development Team
Choosing the right developer(s) for your token and smart contract can be the difference between success and failure. You must be very careful and choose a developer that you can trust to do a good job.

The idea is the first key factor, but it’s useless without a good team. You need a talented team to help bring your idea to life! I would recommend only hiring people with years of experience working with blockchain technology.

To make the contacts you need, you should aim to become more involved in the blockchain community. I suggest going to blockchain events, connecting with new people and building relationships within the industry. This will help you to find the right people to join your project!

How to Create a Cryptocurrency: A Smart Contract
Smart contracts play a huge role in your cryptocurrency project. For those who don’t know what a smart contract is, let me briefly explain…

A smart contract is like a traditional contract; except it is digital, runs on the blockchain, is executed automatically, and cannot be changed.

How to Create a Cryptocurrency

Inside a smart contract, rules are written. In a ICO smart contract, the rules may be something like IF a user sends 1 ETH to the smart contract, THEN the smart contract sends 100 tokens to that user.

Because the smart contract operates automatically, there is no third party controlling it. This means the user does not have to trust you.

Instead, they trust the smart contract, which is just code. If code is correct, it cannot cheat you. So, the user knows they will always be paid the right number of tokens and that they will receive them on time.

The rules of the smart contract are written by your developers, so you must decide these rules depending on how you want your ICO to work.

For more on smart contracts, see my What is a Smart Contract guide.

How to Create a Cryptocurrency: A Professional External Audit
Like I said a moment ago, smart contracts are just code. This is the same for tokens. So, for a user to trust the code, they need to know it is secure. This is why you need a professional audit.

Not only does it mean the user/investor can feel safe, but it also means that you can feel safe — you wouldn’t want to spend all that money on smart contract and token development only for it to get hacked, would you?

It is an important step that brings legitimacy to your project. These audits are often referred to as ICO security audits, and you can get them from companies like Practical Assurance. Always ensure that the audit company you choose is credible and has a long history.

Getting your ICO verified with a professional audit will help promote your cryptocurrency project. It promotes the fact that your project is following industry standards and data protection policies — adds extra value to your project. It’s a crucial step!

How to Create a Cryptocurrency: A Well-Written Whitepaper
If you want to learn how to create your own cryptocurrency, you’ll need to know how to make a good whitepaper. When I say good, I mean really good — a whitepaper what investors will use to judge your project.

How to Create a Cryptocurrency
INTERESTING FACT
Creating a good whitepaper to present to the public should be one of your top priorities. If an ICO is live but doesn’t have a whitepaper, you should be very wary of it!

So, let’s look at what makes a brilliant ICO whitepaper. According to VentureBeat research, a whitepaper should follow this format:

All whitepapers should be in PDF format – PDF white papers are accessible on different systems and browsers without worrying about format/structure and layout problems.
Page count – all white papers must have two versions. A regular whitepaper (20-100 pages) and a litepaper (around 2-8 pages). A litepaper is just a shorter version of the whitepaper — it highlights all the key information.
Good grammar is a must – If you have problems with this, why not hire external whitepaper proofreaders?
Languages — your whitepaper should be in multiple languages. Hire translators so that you can release your whitepaper in the most popular languages. I recommend English, Mandarin, Spanish, Japanese and Korean. If you can do more, go for it!
Answer the following questions:
What is your idea?
Why is your idea/solution needed?
What are the ICO funds going to be used for?
When will the tokens be released so that they can be traded and listed on exchanges?
When will the project be complete? (Show a detailed timeline of the steps you will take from ICO to project success!)
Who are your team? What have they done in the past? How are they qualified for the job?
How to Create a Cryptocurrency: Marketing for your ICO
So, you have a brilliant idea. You have a great development team. You have your smart contract and token decided on. You’ve got a brilliant white paper (and litepaper). Finally, you’ve had your idea professionally audited by an external agency.

Now, it’s time to think about marketing your ICO!

You need to build support and trust from a loyal community. You will need a website, a good domain, and a good social media presence. Also, there are plenty of various marketing and sales tools online that can help you advertise your ICO.

Social Media

I’d recommend Facebook, Twitter and LinkedIn at a minimum. If you’re really serious about social media, I’d also advise Instagram and Snapchat, although it all depends on the nature of your project.

You can either manage this yourself or hire a team to do it for you. Either way, you should create a strong social media campaign that boosts the popularity of your ICO.

Social Media Site of B2B Marketers
How to Create a Cryptocurrency

Press & Media

This is where your ICO gains real credibility. If articles about your project are published to well-known, well-respected media websites (such as Forbes, Business Insider etc.), your ICO will be much more trustable.

You can try to create this deals yourself, or again, you can hire a team to do it for you. The more popular the website, the more the article will cost (usually). So, see what’s available and then decide what is best for you.

How to Create a Cryptocurrency

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