Here’s the business plan:
- Create your own crypto
- Tweet about it
In fact, there are several ways to create a cryptocurrency, some which don’t involve writing a single line of code. But it’s not an instant path to riches, and most successful crypto projects are more involved than just launching your own personal coin.
So before you go and create “TomCoin,” it’s important to understand the details of making your own crypto and why you would even consider doing this in the first place.
How to Make Your Own Cryptocurrency
Creating a new cryptocurrency is akin to launching an app or a new start-up company. You need to come up with a unique idea, decide on the technology to use, design your product, and market it to a relevant audience.
Here is a step-by-step guide to creating your own cryptocurrency:
1. Define Your Idea
What do you want your cryptocurrency to do? What problem will it solve?
Cryptocurrencies were originally designed to solve financial problems but have since expanded into almost every industry. Getting specific on the problem your cryptocurrency is designed to solve will help you narrow down the focus of your project and helps to determine the details of how you will create and market it.
Whether you want to create a crypto that makes it easy to transfer funds from one party to another or you want to build a groundbreaking new app that helps solve an industry problem, spell it out. Without a clear value proposition, adoption may be difficult.
Eventually, this idea should be formed into a formal white paper that outlines the reason for creating your cryptocurrency, the problem it addresses, and the roadmap of actions that define success for the project. More on this later.
2. Decide How to Create Your New Cryptocurrency
There are several ways to create the actual cryptocurrency itself. Crypto is a piece of software that runs on blockchain technology, so there will be some development required. You don’t have to do the coding yourself, but be prepared to spend a decent amount of money if you hire out the process.
It is important to note the difference between a crypto “coin” and a crypto “token.” Coins are native to a given blockchain, whereas tokens are digital currency that are not native to the blockchain they are operating on. Creating a crypto coin requires more knowledge of blockchain coding and creating your own blockchain, while launching a token can be done on an existing blockchain, such as Ethereum.
Here are four ways to create a new cryptocurrency, from hardest to easiest:
Create a New Blockchain
For hands-on developers and those who want the most control of their project, creating a new blockchain that supports the new cryptocurrency is the best option. It is also the most time-intensive, requiring custom coding and a deep understanding of blockchain technology.
Creating your own blockchain does give you the advantage of building it exactly as you want it and allows you to mint your own coins that are native to the chain. But it also requires staff or a community to maintain the code and make updates as necessary.
Modify an Existing Blockchain’s Source Code
To speed things up a bit, another option is to copy the source code from an existing public blockchain and modify the code to make it your own. This was a popular way to create new cryptocurrencies in the early days of Bitcoin, as new founders would copy Bitcoin’s code, make a few modifications, and launch a new blockchain with the updated code.
This process is also known as “forking.” It allows tech-savvy developers to save time and build off a time-tested blockchain instead of creating one from scratch. Once the code is completed by the developer, it should be audited by a third-party agency before release. And before launching a “forked” cryptocurrency to the public, owners should consult legal counsel to ensure it is entirely legal.
Use an Existing Blockchain
Launching a new cryptocurrency on an existing blockchain is a popular way to launch a crypto token. While the blockchain already has a native coin, tokens are built on top of the existing blockchain to function as digital currency for a particular application.
There are many popular blockchains that host new cryptocurrencies, including Ethereum, Solana, and Cardano. Developers can build applications on top of these blockchains and create a unique token to operate within that application.
This still requires some coding skills, but there are also online tools available to help create a new cryptocurrency on top of an existing blockchain.
Hire a Blockchain Developer
If all the above options sound a bit too complicated, the easiest choice is to hire a blockchain developer to create your cryptocurrency. This is a capital-intensive option and still requires defining how you want your cryptocurrency to function, but it outsources the development and code updates to a third party.
You will still need to choose whether to create your own blockchain, fork an existing blockchain, or create a token on top of an existing blockchain, and create a clear requirements document for the development team. But the end-to-end process of development and minting of your new cryptocurrency will be handled by the developer, which can cost $100 per hour or more.
3. Choose a Consensus Mechanism
When choosing a blockchain to use for your cryptocurrency, it is important to distinguish how you want the blockchain to operate. The consensus mechanism is the blockchain’s protocol for how transactions are validated and how new coins are created. There are several consensus mechanisms to choose from, but here are the two most popular:
- Proof-of-Work (PoW). Bitcoin was designed as a proof-of-work (PoW) blockchain. Many blockchains have followed suit since its launch in 2009. PoW was designed to require independent validation and verification of transactions on the blockchain by node operators to add block records to the blockchain and mine new coins. This practice has become controversial because PoW blockchains require a massive amount of energy usage to continue mining the coins. But the technology is proven and secure.
- Proof-of-Stake (PoS). Proof-of-stake (PoS) has become popular because it doesn’t require massive processing power. It simply requires node operators to lock up a large deposit of coins (a “stake”) onto the blockchain to become a trusted operator and validate and verify records on the blockchain. This cuts down on the massive power usage of PoW blockchains while still operating as a secure, decentralized network.
Whichever consensus mechanism you choose, it is important to understand the implications of this process in how to secure your network and create new coins.
4. Design the Nodes
A cryptocurrency node is an independent computer operator that joins a blockchain network to help process transactions, record blocks, and earn crypto for their efforts. This is how cryptocurrencies are decentralized as the code is housed on dispersed computers around the globe.
You will need to choose how the nodes operate, what functions they will perform, and whether they will operate as permissioned (must request access) or permissionless (anyone can join). This includes defining the hardware requirements to operate a node, the internet bandwidth requirements, and the minimum investment required to become a node operator.
5. Build the Blockchain Architecture
The blockchain architecture is the nuts and bolts of how information is recorded. Blocks are added in sequential order, with each new block containing all the information from previous blocks in the blockchain. This makes it difficult to change after a block is added, so it is important to define the architecture before launching your cryptocurrency to the public.
This includes defining how everything works together, including the nodes, transactions, blocks, mining of new coins or tokens, and the consensus mechanism, as well as any other functionality unique to your project. This is best suited to developers with a deep knowledge of blockchain technology, and it is common practice to test the architecture in a controlled environment before releasing it to the public.
6. Integrate APIs
Do you want third-party tools and programs to be able to connect to your cryptocurrency? If so, you may need to integrate an Application Programming Interface (API), which allows developers to communicate with your software.
It can help increase adoption if your cryptocurrency can connect to other, more popular applications. APIs can be custom coded or you can work with a third-party API developer to have them created.
7. Design the Interface
How will users interact with your cryptocurrency? Will it be through an application, a website, or some other user interface? Creating an intuitive design that allows users to easily interact with your new creation is important to increase adoption and grow your project.
Designing the interface will be unique to your project, the objectives and goals you are trying to accomplish, and how you want people to use your crypto. Interface design can be done with an in-house designer or hired out to a third-party company.
8. Make Your Cryptocurrency Legal
Cryptocurrency is in a regulatory gray-area in many countries, so it’s important to make sure your cryptocurrency is following all known laws before you launch. This may require hiring legal counsel to consult on your project, making sure your messaging and the operation of your crypto project are all above board.
9. Create a White Paper
You’ve done it! You have built a cryptocurrency worthy of your name (TomCoin), and now you want to share it with the world!
Following suit with popular cryptocurrencies such as Bitcoin and Ethereum, creating a white paper that details the mission, vision, and technology behind your new cryptocurrency is a great way to get new users (and investors) up-to-speed on what your crypto is all about.
Creating a white paper is usually done in partnership with the development team. It should outline how the cryptocurrency operates and some of the code-specific functions that developers have created to make it stand out from competitors — faster, more scalable, etc.
The white paper should be easily accessible to the public via the company website.
10. Create a Community
When launching your cryptocurrency to the world, it’s important to have a group of supporters that can help you spread the message. This may require hiring a dedicated team to manage community-building activities, including management of online community apps like Discord and Telegram and social media platforms.
It is just as important to have a community support team in place to answer any questions that come up because this builds trust with members. Having regular updates, live broadcasts, and Q&A sessions also helps give the community a feeling of ownership in the project, further boosting your promotion efforts.
Creating your own cryptocurrency is possible, but creating a successful crypto company takes a lot of work. Launching a crypto is more akin to founding a technology start-up company, with a need for a strong core team, competent leadership, a solid marketing plan, and a support team to help manage growth and community building.
Cryptocurrency offers an abundant opportunity to change the technology landscape and disrupt any industry that handles money (hint: all industries). But it’s not as simple as tapping a few buttons and popping out a world-changing new currency. Making your own cryptocurrency successful will require effort, promotion, and a willingness to consistently provide value to holders of your cryptocurrency to truly gain adoption.
But hey, if you simply want to go create “TomCoin” so you can send some to your friends, go right ahead!