How to Create Your Own Cryptocurrency (Briefly)
The total value of the currency depends on user involvement, and it cannot be monitored or managed by the federal government. This is what makes them volatile and risky.
The Tech Behind Cryptocurrency
The hype surrounding Bitcoin caused a huge demand for virtual currencies. However, cryptocurrencies are the outcome of a new form of technology. This technology is referred to as ‘blockchain’, a system based on private or public networks. All the data in these networks is recorded and stored in the form of blocks. Each block has information on different aspects like:
- Details about the User – This includes personal information of the user who is entering the transaction. Fields include the name, username, IP address, personal address etc.
- Details about Transaction – This field has all the records about the product that is being transacted, the actual value of the transaction, the quantity, and the rate.
- Timestamp – The timestamp records the date and time when the block is created or accessed by the user.
This information is contained in each and every block. Each block can be accessed by gaining access to any computer connected to the network. Since the information is decentralized and transparent, Blockchain application development technology is also referred to as a ‘Distributed Public Ledger’.
Creating Your Virtual Currency
Since it is not regulated by the government, you can create a crypto coin of your own without needing any government approvals or permissions. Some background knowledge in coding and programming is sure to help, but one can still create a virtual currency without this knowledge.
So how do you create a virtual currency in your name?
Step 1: Define your source code
A source code is also called a smart contract. A smart contract contains all the information about the virtual currency. The source code is similar to the prospectus of a company. The nature of the coin or the purpose behind issuing this coin is contained in the source code. If the purpose behind creating the crypto-coin is well defined, then it becomes easier to raise money through the initial coin offering. For example, there is a crypto coin called Dentacoin, which was issued to support dental care. Users could pay their dentists (who accept Dentacoin) for their services or as premium payment for future services. This way, the users won’t have to spend actual cash on their treatments.
Some coding background will be necessary for creating the source codes and going through Satoshi’s original whitepaper can also be very helpful in creating the smart contracts
Step 2: Define your Currency
If you want to replicate a very popular and widespread currency, it is advisable to make some changes in your tokens. Any shortcomings of the original currency can be replaced by adding new features in the smart contract. To make this exercise fruitful, it is best to study Bitcoin to the core. The source code of Bitcoin is publicly available and can be downloaded from different websites. You can create a new coin in your name and keep upgrading it. This is the step which differentiates your coin from other virtual currencies out there.
Step 3: Initial Coin Offering
The first step helps in building the architecture for the virtual currency. The second defines the currency. However, the third step involves raising funds through an Initial Coin Offering or ICO.
This step is all about marketing your coin. The ICO process is entirely reliant on building trust among the users, because no one is going to fund your coin if the purpose behind it is unclear. Moreover, you should know that the investors should be offered a coin which fulfills their interest.
Step 4: Promote your Coin
Try to attract as many investors as possible – invest in marketing. Satoshi was able to bring Bitcoin to such lengths mainly thanks to a well-timed and well-executed marketing strategy.
The only way your coin will be successful is by coming up with a compelling pitch. A low-risk investment brings a high value. Moreover, why your coin is better than the others should seem obvious to the skeptics, so offering value is the only way to successfully promote a token in the virtual currency space.