Your Own Cryptocurrency From Scratch: Everything You Need to Know To Create Your Cryptocurrency
Is it possible to create your own cryptocurrency? Surely, it’s possible! Moreover, you won’t be the first to run such a project.
According to statistics, over the past decade, 4K+ new coins have appeared on the market, and the figure keeps growing. And although Bitcoin and Ethereum are still topping the popularity list, it's not too late to do your best to challenge them. Who knows, maybe you’ll be able to join the leaders either.
Now you feel inspired, don’t you?
"I want to create my own digital currency too and become the leader you’re talking about!"
Well, anyone can develop an altcoin, but only a few are capable of making it successful and liquid. To be among the lucky ones, you should take your time, weigh the pros and cons, figure out how to get around possible pitfalls, and much more.
Interested? Then let’s discuss how to create your own cryptocurrency: here’s a detailed tutorial you’re welcome to start with. At least, we hope it’s going to be your tutorial, for we've written our blog piece as a kind of development guide, and by reading it you'll know how to approach the whole thing.
Okay, let's deal with the basics first and then move on to more complex issues.
What Is Cryptocurrency?
In a broad sense, digital currency is a currency existing in electronic form. Any organization, including the central bank, can issue it.
Digital currency could be both regulated and virtual (unregulated). An example of a regulated one is China's digital yuan (although the project is still in the testing phase). On the other hand, an unregulated (virtual) currency doesn’t depend on government agencies, which makes interacting with it much easier.
Finally, CRYPTOcurrency is a special type of virtual currency that uses cryptography to secure transactions. Cryptocurrency consists of coins, the so-called altcoins (Alternative Coins). And this name is true for any crypto coins except for bitcoins (these pioneering coins don’t need any extra clarification).
Okay, we've worked it out; hopefully, you've got the key idea. But anyway, to create your cryptocurrency from scratch or with ready-made solutions, you have to dive deeper. So let's do it!.
How does it work?
The cryptocurrency is based on blockchain technology. It’s a distributed network, the nodes of which aren't subordinate to a single controlling center. Devices joining the blockchain receive a sort of file with all network data. Information forms special blocks, which are only available for viewing (therefore they’re protected from being changed by someone else's will).
Simply put, data is stored on multiple devices at once and cannot be manipulated. It’s about creating a secured p2p network (blockchain network), whose assets are fully controlled by each participant (and we mean each one!). That’s why cryptocurrency, on the one hand, is well-protected from cyber fraudsters, and on the other hand, it isn’t subject to any third-party influence.
Sounds complicated, right? Is it even possible to make your own cryptocurrency, given the foregoing? The answer is yes, just keep reading, and we'll explain to you everything point by point.
Essentially, both altcoins and bitcoins are just secure digital records encrypted with special cryptographic codes. And these records become cryptocurrency only in one case: if there is a demand for them, if they can be exchanged for goods or services. We’re talking about the market value of cryptocurrency, you see?
History of cryptocurrency
Do you think it all started with bitcoins? That's where you're wrong, the history of digital money goes back to the 90s. Alas, those first attempts to create a viable product able to compete with powerful payment systems (such as PayPal) completely failed. Let's discuss it in order, though.
So, the pioneer, albeit unlucky, was David Schaum, who launched DigiCash in 1989. DigiCash's goal was to send currency anonymously. By the end of the 90s, the project went bankrupt. Its next analogs (E-gold and Liberty Reserve) were also unsuccessful.
Why did these services fail? There are many possible explanations, and one of them was given by Satoshi Nakamoto, the creator of bitcoins. He believed that DigiCash and other projects hadn't succeeded because they were centralized and therefore based on trust. He took a different approach and launched Bitcoin in early 2009.
By the way, there is an opinion that Satoshi Nakamoto never existed, and this is just the project name. But what difference does it make? The main thing is that thanks to Satoshi Nakamoto (be it a person or a team), you can also create your own cryptocurrency coin today.
Surely, the first version of bitcoins was crude, but the second, which appeared a little less than a year later, had better features. And each subsequent release of bitcoin was more efficient than the previous one.
A few years later, in 2013, someone came up with the idea to use a cryptocurrency in financial transactions. And it led to many similar projects (perhaps yours will be among them too if you decide to launch your own cryptocurrency).
Key characteristics of cryptocurrency:
Decentralization. Cryptocurrencies don’t depend on a management center such as a bank, which gives many advantages, including the following one…
No need to rely on trust. Since third parties aren’t involved in transaction processing, there is no need to trust anyone. Trust is replaced by verification, which is a more reliable business basis.
Cryptographic encryption, thanks to which the created coins are properly protected and kept under control.
The unchangeable nature. Blockchain-based transactions cannot be reversed, delayed, duplicated, hidden, or altered. This reduces the risk of fraud.
Digital character. Cryptocurrency, like any digital currency, only exists on the network.
Responsive scaling. There are a number of rules, which ensure the normal functioning of the cryptocurrency when scaling a project. Say, in some cases, the mining reward decreases.
Before you decide to program your own cryptocurrency, study the disadvantages of digital coins (they’re few, but still exist and must be taken into account when planning a project).
Disadvantages of digital coins
No guarantee. The lack of third parties seems to be cool, but the downside is that each user is personally responsible for his savings. In case of theft, he won't be able to return the money.
Volatility. Cryptocurrency is quite unpredictable and depends a lot on current demand.
Risk of restrictions. Some countries have introduced restrictions on the use of cryptocurrency.
Irreversibility of transactions. Once a transaction has been committed, it cannot be canceled.
But don't let these shortcomings scare you away from the idea of developing your own cryptocurrency. The pros outweigh the cons, that’s for sure.
Where are crypto coins used?
Secret payments. If a person wants to make a money transfer secretly (anonymously), cryptocurrency is what he needs. Anonymity is inherent in all cryptocurrency transactions (see below), but some coins are better in this regard than others. Among them are Monero, PIVX, and Zcash.
Storing money savings. Blocking cryptocurrency accounts is close to impossible, so digital money is a good option to store savings.
Earnings on trading. Why not bring your cryptocurrency to the exchange and make money on trade transactions?
Simplified investments in startups. Cryptocurrencies make it easier to encourage and attract investment.
Online payments. Cryptocurrency transactions are performed at high speed, with low fees and high reliability, so they’re a cool choice for Internet payments.
Why Make Your Own Cryptocurrency?
Now let's see why you, as a business owner, should bother with creating a cryptocurrency at all... what's the point?
If you're among the doubters, answer yourself honestly to the following questions:
Is your business working online?
Does your business offer an online payment option?
Let's say, the answer to the above question is no... then do you want to add an online payment feature in the coming time?
Are you planning to scale up your business in the future?
Do you want to follow trends, including digital ones?
Do you intend to get some additional source of income, which isn’t directly related to your main business?
And finally, do you realize that the whole world is going online?
If you answered yes to at least one question, you do have your reasons to create your own cryptocurrency... and here they’re:
No intermediaries. As you understand, cryptocurrency allows you to process transactions without the participation of banks and other financial institutions. There are a lot of advantages to such an approach, and you'll read about some of them just below.
Small commissions. Among others, the absence of intermediaries leads to a reduction in fees (in the end, you don't need to pay third parties for their participation in the process of a monetary transaction).
High security of payments. The main thing is the security of payments due to the minimization of the possibilities of fraud, falsification, and other similar manipulations with cryptocurrency.
Fast transactions, which is another reason to build your own coin. And indeed, when dealing with cryptocurrency, transaction processing speeds up significantly.
Global coverage. Cryptocurrencies are accepted internationally: in other words, a seller and a buyer from different countries may interact freely and easily. Your client’s location doesn’t matter anymore (at least when it comes to payments).
Payments transparency. Theoretically, the history of any cryptocurrency payment can be studied and viewed up to the very moment of the coin generation, because all entered data is unchangeable.
The anonymity of payments. Traditional digital currency transactions are easily tracked, and the wallet owner is like an open book (which he is unlikely to approve of). With crypto wallets, such a trick won't work: only the crypto wallet number and limited data on account balances are available, and that's it.
No dependence on devaluation and inflation. The cryptocurrency rate is dynamic and has nothing to do with political regimes and other similar circumstances.
Expanded customer base. An increasing number of people are choosing modern payment methods, including those based on cryptocurrency. And if you launch the cryptocurrency, you can include these modern-thinking people in your customer base too.
Now you know why you should create your own altcoin. "Okay, I do know it now… but how can I make my own cryptocurrency a successful and profitable venture? What are the secrets?"
We’re able to answer these questions too, which we’ll do right now.
Useful Tips on Cryptocurrency System Creation
We’ll do our best to cover all the issues related to the topic, and we’re going to discuss them step by step.
What About the Laws?
Almost everyone can create a crypto coin, it’s true. Before you get down to business, however, make sure the cryptocurrency is legal in your chosen target market. Also, you need to study the rules of cryptocurrency registration (if you want to avoid the same fate as TON, a coin by Pavel Durov).
By the way, take a look at the map illustrating the legality of crypto coins, it may be useful to you.
Create your project concept
Can you create your own crypto coin without a pre-prepared project concept? Of course not! That's where you start.
First, ask yourself what motivates you to develop a cryptocurrency. Why do you want to deal with all of this, to begin with?
Here’re some possible answers:
supplementing your business with an innovative payment system. For instance, Netflix created its token too. It’s aimed at the payment for Netflix services (access to movies and series) and unsuitable for anything else (which reduces the risk of fraud). A token isn't really a coin, but we'll talk about the difference between these concepts a bit later. Anyway, thanks to tokenization, Netflix attracted a lot of new consumers;
additional income (you can make your own crypto coin free and still earn on it. There are many ways to monetize your cryptocurrency);
introduction of new online services;
personal interest in cryptocurrency technologies;
and much more!
The next step is to understand how your project will differ from existing ones. In other words, you shouldn't invest in cryptocurrency if you haven't come up with a USP.
What is a USP?
USP stands for Unique Selling Proposition. To be precise, we're talking about a certain product's feature, which distinguishes it from its competitors and makes it unique.
The fact is, new currencies with almost identical characteristics are constantly appearing in the world. They have nothing new and useful to offer and eventually fail.
On the other hand, Ethereum has become successful because it has the original code and provides consumers with an improved smart contract system. Litecoin, it would seem, completely repeats the bitcoin code, but it has four times more coins issued and a very special CPU-based mining scheme.
Do you see our point? You should come up with something of your own (something unique) to survive in the cryptocurrency market. Do your utmost to figure it out before you get started.
“But how can I make my own crypto coin special?” - you may ask. Don’t worry, we’ll give you a couple of tips to help you achieve your cherished goal:
study the most popular currencies in detail and try to understand what made them market leaders.
evaluate the ratio of supply and demand. The higher the demand, the more interest in the supply;
think over what the modern consumer needs. What problems are you going to solve with your crypto coins?
consider the domino effect. Keep in mind: anything that happens to one currency will automatically affect others (including yours).
Choose how to start a new cryptocurrency
Let's say you figured out how to make your cryptocurrencies recognizable and useful (original in one way or another). It's time to think about ways to create a cryptocurrency coin.
But first… do you know the difference between tokens and coins?
Coins and Tokens: what is the difference?
Coins are based on their own blockchain. You can think of them as ordinary coins in your wallet or piggy bank. They are used to transfer funds, store savings, and more.
Popular coin examples include Bitcoin, Ethereum, Emercoin. They all run on their own blockchain.
So in order to launch your own crypto coin (not to be confused with tokens), you have to start with blockchain creation. Tokens are much easier to deal with.
The point is, the token uses the existing blockchain infrastructure (say, Ethereum). And therefore, you only need basic programming skills to build it (or you can do without them altogether).
Tokens are using the so-called smart contracts and often work in conjunction with blockchain-based applications. For example, Musicoin is a token, which allows users to access various features of the Musicoin music app.
Or how about the WePower token (WPR), which represents electricity generated in an environmentally friendly manner? Customers resort to WePower to buy and sell electricity on the blockchain.
Now let's recap how to make a cryptocurrency. Choose one of the options:
A coin from scratch, which implies a complex full-fledged project (and first of all, you should create your own blockchain).
Fork of the existing currency (alas, the value of such a project is rather low).
Tokens, based on Ethereum or another reliable blockchain.
Perhaps now you want to ask us one more question, which is: "How can I create my own cryptocurrency? What programs or systems will help me with this?"
Read on, and you’ll get the information you need!
Your Assistants: Popular Cryptocurrency Platforms
GitHub is a well-known IT resource where you’ll find the right code to create your own digital coin. A good example is the Open-Transactions library, which simplifies the process of cryptocurrency creation. It comes with all the required sets of APIs. As the developers who provide Open-Transactions assure, the transactions made using this solution are reliably protected.
Ethereum, the blockchain platform we’ve already mentioned earlier. Undoubtedly, this is one of the most popular systems for creating new tokens.
First, you need the source code of the standard token (you’ll find it on the official Ethereum website). Ethereum offers both a minimal version with basic functionality and a full one. Choose what you need, copy the code lines, and paste them into the development environment. Now you just have to change the code in such a way that the token meets your goals (for example, you change the name of the token, its ticker, the total number of available units, etc.). When your project code is finalized, you publish it in the blockchain system as a smart contract.
NEO, an open-source blockchain, formerly called AntShares (ANS). Created in 2014 and published on GitHub a year later, it is now known as “China's Ethereum”. NEO is a non-profit blockchain project with an active community of developers around the world. Its key goal is to offer a new model of the economy (“Smart Economy”). NEO allows you to digitize (tokenize) various assets, including precious metals and real estate, and manage them through the conclusion of Neo Contracts.
EOS is another illustrious blockchain-based cryptocurrency system, which makes it easy to create tokens and develop decentralized applications (DAPPs), even complex ones. The advantages of EOS are excellent scalability and an advanced approach to on-chain management. The platform code, which is freely available on GitHub, combines existing blockchain solutions with new unique technologies.
The World Exchange, created by the developers of the Ripple platform (read about it below), will also help you build new tokens. In addition, the service gives access to a digital wallet, selling/buying XRP coins, and much more, but that's another story.
Hyperledger Fabric, a framework maintained by the Linux Foundation. It is often used to create smart contracts and cryptocurrencies.
The most popular way to create a token is to use Ethereum, NEO, or EOS. Let's compare them a bit more.
And now you have every right to tell us: "That’s all very good, but I’d like to know more about creating my own cryptocurrency from scratch… in the end, I am hardly an expert! What should I do first?"
Calm down, we’re happy to help you figure it all out, step by step.
How to Create a Cryptocurrency: 10 Key Business Steps
#1. Analysis of your project prospects
Think about your customers. How will ordinary customers use your crypto coins? What should you offer them to make them even more interested in your project?
Reach out to popular cryptocurrency communities. Discuss your idea with their members, they may be able to give you some good advice; after all, they have a greater understanding of the market in question.
Find a USP. We’ve already talked about how important it is to find a unique feature to make your project special and thereby increase the market value of cryptocurrency of yours.
By paying due attention to all of the above points, you improve the prospects of your project at times.
#2. Calculation of potential risks
Assessing the viability of a project by making sure it has great prospects is one thing, and analyzing the potential risks associated with it is quite another. So the second step involves dealing with potential weaknesses your future product might have.
Of course, in the case of money transfers (including blockchain-based ones), cyber fraud is the main weak point. So imagine yourself in the shoes of a hacker trying to infiltrate your cryptocurrency system. Identify possible vulnerabilities and remediate them, one by one.
In addition, think in advance what will be interesting for users in two to three years, what digital trends should be expected. Otherwise, you risk becoming irrelevant.
#3. Idea clarification
It's time to refine and perfect your initial idea. Perhaps, something should be corrected, supplemented with new information obtained after the first two stages. Your goal is a product, which fully meets the needs of the cryptocurrency market and follows its trends.
And just like that, a rough idea becomes a working concept.
#4. Drawing up a business plan
The next step is to turn your concept into a real business plan. You need to write down all the risks you may face and describe the opportunities your project provides, predict its profitability, analyze the development timeframe, and the like.
#5. Hiring an expert cryptocurrency development team
You, without relevant experience, are unlikely to achieve success and create a demanded product. You won't be able to take into account all the pitfalls. And you'll probably make many of the mistakes that a professional knows how to avoid. So the best thing is to hire a team of highly-skilled experts and discuss your project with them.
By the way, at Agilie, we have both expertise and experience in the area under discussion (which we prove later in the article). So if you ask yourself the question “Who will create my own crypto coin?”, the answer is "Agilie team would be happy to offer the services".
#6. Creating smart contract rules
You may well understand the concept of smart contracts, but just in case, we’ll briefly clarify it so that you know what this is about.
When it comes to cryptocurrencies, a smart contract is a kind of blockchain program, which acts as a digital agreement and implies the implementation of a certain set of rules. The program performs the actions you want, provided that the specified conditions are met. In other words, both parties to the process can calmly interact with each other (say, conduct a transaction) without worrying about trust. After all, if the rules aren’t followed, the contract is automatically canceled.
Here's a good example: let's say two fans have bet on the outcome of a basketball game. And they decided to resort to smart contract technology to ensure the process goes smoothly and without any fraud. In this case, technology withdraws the required amount (bet amount) from their accounts and holds it until the condition is met, which is the completion of the match. And the lucky winner (the one who guessed the result of the match) gets the gain.
So, your task is to come up with these rules and implement them into your system.
#7. External audit
It’s not enough to set up your own cryptocurrency, it’s important to make it legal. And an external audit company would be able to help you with this task. The team you hire will analyze your project and advise on the best way to ensure its legitimacy.
Among other things, an ICO/STO audit is needed to increase the chances of attracting investors. And speaking of them…
#8. Attracting investors
To attract investors, you need to provide them with a detailed description of your project. You’ve already written a business plan, now is the time to evaluate it in a new way and make sure it looks convincing.
Your document should address the following questions: what is the main problem and why is your solution required? When will tokens (coins) be issued? Who is on your team? Etc!
#9. Thinking over an efficient marketing strategy
Now you're perfectly entitled to ask us: "Even if I build my own cryptocurrency, what will make it in demand?"
Good question! This is where marketing comes in.
If we talk about some specific steps, a lot depends on your project. Marketing initiatives may include social media promotion, targeted advertising, and so on. And once again, you had better hire the expert team to do the job.
#10. Building a project community
Every successful crypto coin has its own community, which helps to develop, improve and promote it. You should also try to build and support a strong community.
To get started, choose the appropriate channels for communication with the participants, offer some topics to discuss, and be ready to answer any emerging questions. Comment, react, be active, and sooner or later the community will begin to live its own life, without your constant participation.
Top Players on the Cryptocurrency Market
We've already told you about Bitcoin, including its unusual story. In fact, Bitcoin is the founding father of the entire cryptocurrency area (sort of).
An important nuance: the BTC project remains open-source, and therefore other developers can use it to create new cryptocurrencies.
Ethereum was created by Vitalik Buterin, founder of Bitcoin Magazine. The project was launched in 2015 and managed to conquer at least a quarter of the cryptocurrency market in a short time. Moreover, today Ethereum is at the top of the list of popular cryptocurrencies (right after Bitcoin, which remains number one).
Ethereum has many advantages, and here are the main ones (they are what make it special):
Improved technology of smart contracts, the purpose of which is to minimize human participation in transactions (we’ve already told you about smart contracts above).
The ability to create tokens (we mentioned this cool feature too, as you might remember). As an open-source platform, Ethereum greatly simplifies the implementation of blockchain technology and thus attracts the interest of both startups and major software developers, including Microsoft and IBM.
So can you build your own cryptocurrency without the hassle? Yes, if you’re satisfied with the Ethereum-based token. And why not? Many renowned companies make a choice in its favor and don’t regret their decision in the future.
Litecoin hit the market in 2011. Its creator is Charles Lee, who once worked at Google (which in itself says a lot). And although at its core, Litecoin is just a fork of Bitcoin, it has its cool features: among other things, it processes transactions four times faster than its "progenitor".
Charles Lee was going to link the value of his coin to the value of silver. That's why Litecoin is sometimes called “electronic silver”.
Ripple is another popular cryptocurrency example. It was launched in 2013 by order of venture capital funds. They needed an innovative solution able to provide them with faster banking operations and reduced costs.
The idea was a success, and today Ripple is considered one of the fastest cryptocurrency platforms: any transaction can be processed within just a few seconds.
Another special feature of this cryptocurrency is the impossibility of its mining. All coins in use (nearly 40 million) belong to Ripple Labs.
Our Cryptocurrency Development Experience
"I want to make my own cryptocurrency free of charge!"
And your desire is understandable and quite feasible... if you take matters into your own hands. However, if you don't know much about coding, be prepared to fail. Or hire experienced and qualified professionals.
We offer our services, and here's why:
we‘ve been on the web and mobile development market for over 10 years;
we offer favorable terms of cooperation;
we have rich crypto development experience.
To prove we're skilled experts, we'd like to describe one of our projects in some detail.
It’s called Vertical. It’s a mobile application, which serves as a digital crypto wallet. It has an intuitive, user-friendly interface, so it doesn't take you long to figure out how to work with this app. Its key goal is to help you deal with cryptocurrencies, be it Bitcoin, Ethereum, or something else.
For each selected cryptocurrency, you create a wallet, after which you’re welcome to start working with these coins: store them, make transactions, and so on. The whole process is simple, clear, reliable.
And by the way, Vertical is far from the only example of our experience in crypto application development. Therefore, you can be sure we'll develop a cryptocurrency, which will meet your requirements 100%.
Of course, the widespread acceptance of cryptocurrency remains an acute problem. However, everything is likely to change for the better over time, there is no doubt about that. A striking example is Switzerland, which strives to become the most crypto-friendly nation. To make it happen, its government is working on the creation of a legal ICO basis.
Anyway, it's the best time to follow the trend and join the market leaders. So... let's ask once again, just to clear things up: can you build your own cryptocurrency? The answer is yes you can, especially if you take the tips we’ve provided you with.