.gif)
Initial considerations
After witnessing the success of Bitcoin and Ethereum, you’ve probably thought to yourself,
“Damn, why couldn’t I have come up with that idea and
made my coin!”
It may sound a little crazy at first, but the reality of creating your cryptocurrency isn’t all that far-fetched.
Who knows, maybe your coin could be the next big thing and replace Bitcoin? But there are a few things you need to consider first.
- Define the purpose of your coin
There should be a reason for your coin’s existence. What gap in the market does it fill? Why should people buy it? After you’ve defined its purpose, outline it in a whitepaper.
- Be wary of legal implications
Regulators and authorities have a grudge against crypto. Consult with legal professionals throughout the process to ensure that everything you are doing is legal.
- Draw up a budget
Creating your cryptocurrency is a big task and requires a lot of work. Doing things like development, documentation, and marketing promotion all by yourself is difficult. You need a budget for the team!
- Hire a strong development team
Developing a cryptocurrency demands much technical skill and expertise. Hire a team of experienced developers to bring your coin to life.
- Hire external auditors
People will be investing their money into your project. Make sure that it is secure, and show them that your coin is worry-free and well worth their investment.
- Promote your project
Once you’ve completed all these previous steps and your coin is made, then you need to get the word out there and promote it even if you’ve got the greatest project in the world. If people never hear about it, they’ll never know it exists. Growing the network will help your coin to grow too. Press releases, social media, and blogs are all good places to start.
- Engage with & develop your community
Just promoting your project with posts and press releases is not enough. You need to engage with your community and connect with users. Answer their questions and update them on plans and developments. Create a strong bond with your supporters, and they will advertise your project for you for free, taking your coin to levels you could only dream of.
________________________________________________________________________
A whitepaper is an informational document issued by a company to promote/highlight the features of a solution, a product, or a service. In the cryptosphere, they are more technical documents explaining a new project or the development plan of an existing project. They are a pre-sale marketing tool, commonly used in ICOs to attract users and investors.
________________________________________________________________________
________________________________________________________________________
Initial Coin Offering (ICO) is a popular fundraising method to raise money to create a new coin, an app, or a service. Sometimes ICOs are compared to crowdfunding and referred to as “crowd sales.”
________________________________________________________________________
Coins vs tokens
How do we actually create our own cryptocurrency? As you know, there are different types of crypto assets out there.
For creating your cryptocurrency, the biggest distinction is between types of crypto: coins and crypto tokens.
Cryptocurrencies, also known as “crypto coins” or just “coins,” are crypto assets with their blockchains. Bitcoin and Ethereum are two well-known examples.
Crypto tokens, or just “tokens,” borrow the blockchain of another crypto asset instead of creating their own.
These projects follow this approach as it is much easier and cheaper to build on an already developed platform rather than to create one from scratch. Some projects start on the Ethereum blockchain before moving to their blockchain later on. This tactic saves a lot of time and money on development costs and lets the team estimate the project’s potential before going further.
How to create an ERC-20 token
There are several networks, such as Ethereum, NEO, and EOS, on which you can create tokens.
Since Ethereum is the most popular, we’ll go through how you can create your token on it. Let’s examine some steps on how to create your token:
- Deploy a new smart contract. When creating your token on Ethereum, download Mist. It’s an Ethereum wallet that lets you mine or develop Ethereum software, like an ERC-20 token. Once you’ve downloaded and opened Mist, go to the Wallets tab and fund it with ETH. Then click on the Contracts tab and select “Deploy New Contract.” Choose “My Token” in the section that says “Select Contract to Deploy.”
- Set the token supply. Set a limit on the number of tokens you will create.
- Enable your token to be sent and received. Allow your users to send and receive your token, so it’s actually possible for it to be used in transactions and traded.
- Set your token’s name, symbol, and decimal units. The name and the symbol are pretty self-explanatory, but the decimal units are important because they refer to how divisible the token is. They set the number of digits after the decimal place when displaying token values on the screen. 0 is non-divisible, 18 is pretty much continuous, and you can go even higher if you need or wish to.
- Create a token transfer event. This allows ETH wallets to know when a transfer of your token takes place.
- Unleash your token upon the world. Congratulations! You’ve done it! Your token is now ready to be launched. Set a fee to send your token transaction. Click “Send” and enter your wallet password if required before launching your ERC-20 token. Once your token is live, go to the Send tab on Mist and send your token to whoever you want.
Hard vs soft fork
Creating your crypto coin is a whole other story. Generally, it takes a lot more technical expertise, and building your blockchain from the ground up will be quite a challenge.
A simpler alternative would be to just copy the code of an established asset, like Bitcoin, and add or change a variable.
However, this step still requires some technical skills, so it’s not for everyone. Even if you do manage to do that, you’ll be left with a token that isn’t really all that different from the one you copied the code from.
Another way in which you could create your cryptocurrency would be to change the underlying protocol of the selected asset’s blockchain.
This is a fork, of which there are two kinds: a hard fork and a soft fork.
It is a change to the network that can either be small or large. It can be initiated by developers or by community members. Soft forks are like updating the operating system on your phone.
Hard forks are like completely changing the operating system to a new one. By implementing a hard fork, you can split from the original crypto asset and create something different with its use and purpose. Bitcoin Cash (BCH) is a well-known example of a hard fork from the Bitcoin network.
ICOs/ IDOs/ IEOs/ IPOs
When traders plan to create their own coins, they look for funding to promote and develop new currencies. Such fundraising events are known as initial coin offerings or ICOs. They are the crypto industry’s version of an initial public offering (IPO) and can be a great way to get in on a project at ground level before it takes off.
For example, people who invested in the ICOs of Ethereum, IOTA, and Binance Coin made massive profits from their early investments. During ICO campaigns, investors, supporters, and fans of the project buy some tokens either with fiat or with some digital currency, usually BTC/ETH.
These coins are referred to by buyers as tokens and are similar to shares of a company sold to investors during an IPO. If the money raised does not meet the minimum level of funds, then the money can be returned to the investors, declaring the ICO unsuccessful.
ICOs and IPOs differ in several ways. ICOs are used by start-ups to raise funds and enter the market. IPOs traditionally occur at a later stage when a company is financially stable and wants to expand.
IPOs are heavily regulated and must pass many checks and meet certain requirements. For this reason, preparations for an IPO can take at least 6 months. ICOs, on the other hand, are virtually unregulated. This means that investors must do their research and exercise a high degree of caution before investing in any.
The Securities and Exchange Commission (SEC) can sometimes intervene. In 2017, they classified tokens from ICOs as securities. For example, the SEC shut down Telegram’s ICO in 2019. Telegram eventually announced in 2020 that they were dropping their plans to release their coin, the TON coin, after losing a lengthy legal battle with the SEC. They were also ordered to repay investors $1.2 billion and pay a fine of $18.5 million. A similar case happened with another messaging platform Kik and their Kin token in 2017.
Because of the lack of regulation during initial coin offerings and several scams, ICOs have lost much of their popularity.
Nonetheless, new alternatives have appeared in the past few years, such as initial exchange offerings (IEOs) and initial DEX offerings (IDOs). IEOs are regarded as the next step in the ICO evolution, sometimes described as a mix between an ICO and an IPO.
A crypto exchange oversees that blockchain projects go through a comprehensive inspection, giving them an air of increased security with greater levels of due diligence.
Only users of the exchange overseeing the token sale can take part in the IEO. However, there are still risks. Pump & dumps are still possible, some exchanges/projects may cut corners to list IEOs quicker, and international regulations and restrictions are unclear.
To sum up, there are a couple of ways in which you can create your own cryptocurrency.
A lot here depends on your skill level and the time and money you’re willing to invest.
You can start from scratch and create your own coin by building your blockchain network. This method is probably the longest and most difficult of all options.
You could copy the code of another established crypto asset like Bitcoin and change a variable, but this will leave you with a coin that’s similar to the one you copied the code from.
Another possibility would be to fork from the blockchain of an existing asset, like Bitcoin, and change the blockchain’s underlying protocol so that you could get something new and different. Think of Bitcoin Cash’s hard fork from Bitcoin — this is a good example. If all of this is too much for you, you can create your own ERC-20 token using smart contracts on the Ethereum platform, which is much easier and quicker.
Once you’ve created your coin, or perhaps even before you’ve created it, you may need to raise some funds to develop the project. Fundraising methods such as ICOs, IEOs, and IDOs may all come in handy to get your project and coin started. And finally, once you’ve checked everything off on your list, don’t forget to promote and advertise your coin and watch it take you to the moon.
Comments
Post a Comment