There are several ways to create a digital currency, each of which carries its challenges. On that note, in this guide, we’ll explain how to create a crypto token using three different methods.
In addition to that, we’ll discuss the costs involved in creating cryptocurrencies, as well as their main benefits and legal status.
How to Create a Cryptocurrency
Crypto coin development can be executed in three different ways. You can create a new blockchain, modify an existing blockchain, or create a new cryptocurrency on an existing blockchain. We’ll explore all three methods in the next section.
Creating a new blockchain that will have its native coin offers the greatest flexibility. However, this method also requires the most knowledge. In addition to having software and coding skills, you’ll need to understand how blockchain technology works.
Moreover, the whole process will be time-consuming and it will require a large financial investment as you’ll be using expensive equipment.
Modify Existing Blockchain
You can modify an existing blockchain by establishing a fork in its source code. This will allow you to create your coin without starting from scratch.
What’s best, most blockchains have open-source codes that can be downloaded and edited. Modifying blockchain codes also requires technical knowledge since you’ll be dealing with bugs and other technical issues.
Create a New Cryptocurrency on an Existing Blockchain
If you don’t want to create blockchain codes or modify them, there is another option. You can create your cryptocurrency on the blockchain of existing digital currencies. Many blockchains offer their platforms to developers who want to use them to create their coins. The best examples of these platforms are BNB Chain and Ethereum.
This can leave a good impact on your coin since people will associate it with prominent blockchain platforms.
Steps for Creating Cryptocurrency
Here’s how to start a cryptocurrency production, step by step.
1. What’s the Use of Our Cryptocurrency/Research Use Cases
The first step is to determine the purpose of your cryptocurrency — its use case. What types of problems will it solve and how can people benefit by using it? For example, its use case can be to transfer or store money, support smart contracts, access dApps, or reduce carbon footprint.
Once you decide on its use case, you’ll know which type of blockchain and technology to use.
2. What’s Your Preferred Blockchain Platform
You need to choose the blockchain platform that you’ll use as a base for your crypto coin or token. The most popular blockchain platforms include Ethereum and Binance Smart Chain. Although you can use any other existing blockchain. When choosing a platform, consider its cost, security, and scalability.
Blockchain platforms also use two consensus mechanisms — Proof of Work and Proof of Stake. Choose the consensus that matches your goals.
3. Create the Nodes on the Blockchain
Next, you should add nodes to your making my own cryptocurrency list. Nodes are computers or devices that are connected to the blockchain network. Their main role is to store copies of blocks and verify transactions. Nodes also add new blocks to the network.
When setting up nodes, decide whether you’ll use private or public ledgers and where you’ll host your nodes — in the cloud or on your site. You’ll also have to choose the operating system on which your blockchain nodes will run.
4. Choose Blockchain Architecture
Blockchain architecture can be public, private, and consortium. A public architecture is an open-source network that uses the PoW consensus mechanisms. A private architecture allows access only to selected groups. Consortium architecture allows everyone to connect to the network. Yet, only participants can add information.
Moreover, private blockchains are centralized, while public blockchains are decentralized. This is something to keep in mind when choosing the architecture of your blockchain.
5. Establish APIs
The application programming interface or API is software that connects two applicants and determines how they will interact with each other. The API performs numerous tasks related to cryptocurrencies.
They can include obtaining access to market data in real-time and crypto trading. Likewise, you can use more than one API for different needs.
6. Create Interface
This step is all about designing the user interface that will determine how your coin will look and function. On that note, make sure your user interface is intuitive and eye-catching.
7. Craft Whitepaper
The process of developing cryptocurrency tokens or coins must also include the creation of a whitepaper. A whitepaper is a document that should contain details about your project, i.e., its goals, features, and the way it solves problems. This document may contain economic and technical specifications of your coin, diagrams, and real-life examples.
In addition, whitepapers must be easy to understand, and they must include crypto’s roadmap and tokenomics.
8. Legal Considerations
Before you create your crypto coin or token, consider its legal aspects. In other words, make sure that cryptocurrencies are legal in your country. US citizens must set up an LLC and obtain a license from their local government.
Furthermore, the IRS treats digital currencies as property, not currency, which means they’ll be subject to taxes.
9. Hire An External Audit Company and Do Regular Audits
To prove the legitimacy of your project, you’ll have to hire independent auditors who will perform regular audits. The role of these companies is to test new cryptocurrencies to confirm crypto ownership and to make sure they are legit.
What’s more, auditors will use tools to identify vulnerabilities in the blockchain project and bugs in the code.
10. Create an Online Community
The last step refers to promoting your new project to the public. You can do this by creating online communities. For example, you can create a discord group, reach out to influencers, hold AMAs, and use airdrops. Moreover, make sure to provide updates about your project regularly.
Your goal should be to create a group of active members who will be committed to your project.
Benefits of Creating Cryptocurrency
There are many reasons why you should create your own altcoin. In addition to learning a lot about blockchain technology and having control over your finances, you can also use it to improve your business or run crowdfunding projects.
Improve Your Business
Having your own cryptocurrency will help you reach a wider audience since digital currencies offer faster transactions and lower fees. You’ll also be able to implement it in your business to improve the value of your brand and increase the customer’s trust.
For example, BC Game is an altcoin casino site that has created its own gambling token called BCG that players can use to play games and claim promotions.
Cryptocurrencies can also help you expand your payment options, so you won’t be limited exclusively to fiat. Furthermore, they will protect the privacy of your users since they rely on public keys. And finally, they can lower the risk of fraud.
Run Crowdfunding Projects
Cryptocurrencies are a good choice for launching crowdfunding campaigns. Why? Because they don’t require conforming to the rules of financial institutions. Unlike fiat, digital currencies offer more flexibility and security.
Unlike traditional crowdfunding where project developers offer rewards or capital to investors who contribute to the project, crypto crowdfunding involves buying coins or tokens as part of the project.
This means that by creating your crypto coin or token, you’ll be able to attract investors to join your project without losing ownership.
How Much Does It Cost to Create a Cryptocurrency?
To generate cryptocurrency tokens on a new blockchain, you’ll have to spend between $40,000 and $300,000.
On that note, creating low-complexity blockchains will cost between $40,000 and $60,000. To create medium-complexity blockchains, you’ll have to allocate $60,000 to $150,000. At the same time, the price for high-complexity blockchains ranges from $150,000 to $300,000.
You’ll also have to pay for:
- The creation of a dedicated website — $1000
- Whitepaper — between $1500 and $6000
- Auditing — between $30,000 and $45,000
- Consulting — $7000
- Design — between $7500 and $10,000
- Legal issues — $10,000
- ICO — $20,000
- Marketing — between $5,000 and $15,000
You’ll also have to pay for creating a crypto wallet and listing your digital coin on one of the many well-known crypto exchanges.
Creating a wallet will cost you between $15,000 and $200,000, while listing your cryptocurrencies will cost you between $6,000 and $300,000.
Yet, if you create a token on an existing blockchain, such as BSC, the price will be much lower. About $50.
Is It Legal to Create a Cryptocurrency?
Yes, it’s legal to create a cryptocurrency. However, creators of digital currencies must first get a crypto license. In the US, these licenses are issued by the Federal and State governments — SEC, CFTC, FTC, IRS, FinCEN, OCC, and FINRA.
Crypto developers will also have to comply with securities laws, consumer protection laws, and anti-money laundering regulations. Furthermore, they’ll have to patent their coin to prevent unauthorized use, and their code must not violate copyright laws.
The regulatory landscape is the biggest problem surrounding the creation of cryptocurrencies. Why? Because it’s constantly changing. That’s why cryptocurrency creators must adhere to the laws of the jurisdiction in which they live.
Now that you know how to build blockchain platforms, keep in mind that this is not a cheap investment. If you want your project to succeed, you’ll have to invest money.
On the other hand, creating your own crypto coin or token brings many benefits. If you have a good crypto project, you’ll be able to attract a lot of investors. Moreover, you can use it to expand your business.
Just make sure to follow the crypto regulations and laws of the jurisdiction you live in to avoid legal issues.
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