Not unlike photography and information storage, money is experiencing a digital transformation. This evolution began in the late 2000s with Bitcoin, the first known successful cryptocurrency. As of January 2020, the number of digital currencies has surpassed 2,000. Cryptocurrency provides a variety of advantages including anonymity, immediate and unlimited transactions, security against fraud, low fees, and international acceptance.
If you find cryptocurrency intriguing and want to create your own, you absolutely can! Here are some tips to guide you through that process, whether you choose to do it on your own or with the assistance of a custom software developer like BairesDev.
Create a Blockchain or Utilize an Existing One
At the heart of cryptocurrency is blockchain, a distributed ledger technology using consensus algorithms to regulate the creation of new blocks. These data blocks store transaction information following a designated protocol. Once a block is created and accepted by participants, currency is issued as a reward and incentive to those who helped by allocating computer processing power to support and verify the new blocks.
Your first step is to decide whether to build a new blockchain or utilize an existing one, which will determine whether you create crypto coins or crypto tokens.
Crypto coins operate on their own separate blockchain and require a community of “miners” to support the blockchain and its coin production.
Crypto Coin Advantages
- Initial Coin Offerings (ICO) can raise funds for your project
- Give the most freedom and control
- Coins can be transferred between digital “wallets” or exchanged for fiat money
Crypto Coin Disadvantages
- Higher start-up costs
- Require significant coding knowledge or a skilled development team
Crypto tokens utilize existing blockchain infrastructure (like Ethereum or Neo) to create a new, nearly identical blockchain by changing some of the rules to fit your purpose (also known as “forked-coin”). The underlying blockchain validates and secures token transactions. The tokens form a “smart contract,” or computer protocol, to dictate how the tokens will function. Advantages and disadvantages are as follows:
Crypto Token Advantages
- Easier to create, using open source code
- Faster and more cost-efficient than creating a new blockchain
- Work like loyalty points or rewards
Crypto Token Disadvantages
- Tokens can’t be used as money outside the cryptocurrency project
If you’re still uncertain, you can start out on an existing blockchain platform to test your project’s potential, and then shift to your own blockchain if it proves worth it.
Join a Cryptocurrency Community
Involve yourself in the cryptocurrency community to meet qualified people and get new ideas for crypto development. Go to blockchain events to connect and build relationships within the industry.
Successful blockchains have active, strong communities supporting them. If you’re creating your own blockchain, you must be prepared to support and manage your community:
- Provide a secure and reliable means for your community to interact and ask questions.
- Respond to questions quickly and provide frequent updates on progress.
- Manage it yourself or hire a community management team to help grow a loyal user base.
Ensure High Security
A professional external audit adds value by ensuring your coins are secure and not vulnerable to hacking. Audit verification confers legitimacy, builds trust among users, and helps you promote your cryptocurrency project.
It’s important to demonstrate that you’re following all industry standards and data protection policies.
To accomplish this, make sure the audit company you work with is credible and has a long and proven track record.
Manage Business Considerations
You’ll need to create both full-length and “lite” versions of a whitepaper, which is a cryptocurrency business plan, for your project. Make sure to include the following:
- A description of your idea, the problem it solves, and the purpose it serves
- How the project works
- A roadmap of how you’ll use ICO funds
- Project timeline
- Members of your team (including experience and qualifications)
Consider hiring a development team, especially if you plan to create a new blockchain. Select skilled, qualified developers you trust. Don’t forget to budget for an external audit, community management, and marketing efforts as well.
Understand the legal implications of your cryptocurrency project and follow all relevant regulations. Be aware that, given its evolving nature, various government agencies currently treat cryptocurrency differently. The IRS considers it property, the Securities and Exchange Commission (SEC) considers it securities, and Financial Crimes Enforcement Network (FCEN) considers it money.
Promote Your Project
Plan a robust marketing campaign to generate interest in your cryptocurrency project. First, create a project website to describe it. Maintain a blog to keep the crypto community up to date on your project developments. Use social media, press releases, and newsletters to further promote your project and build trust and credibility. Finally, participate in forums, where investors often look for projects to support.
You can further promote your project by offering bonuses for early buyers of ICO, and by giving “bounty rewards” of free tokens to people who help you with promotion.