Step-by-Step Guide to Creating Your Own Cryptocurrency

How to Create a Cryptocurrency

Anyone can create a cryptocurrency with the right skills and knowledge. Establishing one is an excellent way to learn how blockchains work and what cryptocurrencies are. If you decide it’s for you, there are various ways to go about it. Here are four options:

1. Create your own blockchain and native cryptocurrency.
2. Modify the code of an existing blockchain (a hard fork).
3. Establish a new cryptocurrency on an existing blockchain.
4. Hire a blockchain developer to create a cryptocurrency for you.

Before starting on your crypto journey, be sure to understand the legal aspects that govern the creation of a cryptocurrency in your country.

Important Considerations Before Creating Your Own Cryptocurrency

Because cryptocurrencies have become popular with speculators and people trying to earn profits from emerging technology, it’s only natural to ask whether you should create one to get in on the action. However, there are a few questions you should ask yourself before starting a project like this.

Defining Your Purpose for Creating a Cryptocurrency

If you’re making a cryptocurrency to try and jump into the market for a share of the profits, you’ll need to come up with something that is entirely unique and legal. At this point, another crypto in the market is just another crypto—unless you offer something truly different, your crypto will likely not make an impact.

Setting clearly defined vision and mission statements can help you decide how to proceed. Define the problem you want to address with a blockchain and cryptocurrency. If this sounds like starting a business, it’s because it is. The crypto market is mature enough at this point that new projects need to solve specific problems and be competitive.

But if you want to make a cryptocurrency because you’re curious and it interests you, or you and some friends want to learn about it, it is a cutting-edge learning experience and it might even be fun.

Assessing Your Technical Skills for Cryptocurrency Development

Most importantly, you’ll need to know how to program to create your own blockchain and cryptocurrency. If you’ve acquired the knowledge and have the experience, you should be able to start. If you haven’t, be prepared to learn and gain experience programming distributed ledgers, using cryptographic techniques, developing processes and procedures, applying game theory, and fixing coding mistakes.

Additionally, it helps to have a circle of trusted programmers or friends because building a blockchain and cryptocurrency, maintaining it, securing it, and continuing to develop it after its release is a significant undertaking. But again, if you’re doing it to learn or for fun, it’s an excellent way to see what the blockchain and cryptocurrency boom is all about.

1. Steps to Build Your Own Blockchain and Cryptocurrency

You can write your own code to create a new blockchain that supports a native cryptocurrency. Pursuing this option usually requires extensive training and experience with coding, and a fundamental understanding of blockchain technology—but it also affords the greatest amount of design freedom. If you want to create a cryptocurrency that is truly new or innovative in some way, then building your own blockchain to support that coin is the best option.

If you decide that building a new blockchain is your next step, then here’s what you need to do:

• Choose a consensus mechanism: A blockchain’s operating protocol is also known as its consensus mechanism. The most commonly used consensus mechanisms are proof of work (PoW) and proof of stake (PoS).
• Design your blockchain architecture: Should your blockchain be private or public? Permissioned or permissionless? You get to decide, and it all depends on your reasons for making a cryptocurrency.
• Audit your new blockchain and its code: Many cryptocurrency developers choose to hire specialized blockchain auditors to review their blockchain’s code and identify any vulnerabilities.
• Verify legal compliance: It’s a good idea to pay for expert legal advice before you mint any new cryptocurrency. Legal professionals can confirm that your cryptocurrency complies with all relevant laws and regulations.

And then, finally, you are ready to mint your new cryptocurrency. How many coins you decide to issue initially is up to you. You can decide to mint the complete supply of coins in a single batch, or gradually increase the coin supply over time as new blocks are added to the blockchain.

2. Adapting Existing Blockchain Code for Your Cryptocurrency 

You can decide to use the source code of another blockchain to create a new blockchain and native cryptocurrency. Pursuing this option still requires technical knowledge, as you may choose to modify the source code to satisfy your design objectives.

After you download and modify the source code of an existing blockchain, you still need to work with a blockchain auditor and obtain professional legal advice. After that, you are ready to mint your new cryptocurrency.

3. Launching a Cryptocurrency on Pre-Existing Blockchain Platforms

You can make a new cryptocurrency without first creating or modifying any blockchain. Platforms like the Ethereum blockchain are designed to host the cryptocurrencies of many different developers.

Creating a token that uses an existing blockchain can require some technical expertise, but it’s possible for anyone with moderate computer skills to create a cryptocurrency using platforms designed to make them for you. Here are some basic steps to create a new token on an existing blockchain platform:

1. Choose the blockchain platform: Your first step is to decide which blockchain should host your token. You have many options, with the Ethereum platform and Binance Smart Chain being among the most popular.
2. Create the token: The process required to create your token varies based on the platform you choose and what you’re trying to do. Creating a highly customized token generally requires advanced technical knowledge, but free online tools such as WalletBuilders can facilitate the token-creating process in just a few clicks.
3. Mint your new cryptocurrency: After creating the cryptocurrency, you are ready to mint the new tokens. Using a trusted platform like Binance Smart Chain or Ethereum means that you may not need the services of a professional auditor or lawyer before issuing a batch of tokens.

Your token can benefit from the security provisions of an established blockchain platform, and the blockchain platform may offer other innovative features for token creators. Being associated with a well-established blockchain platform can help to enhance your token’s value and credibility.

4. Outsourcing Cryptocurrency Creation to Blockchain Developers

You can create a new coin or token with any degree of customization by hiring a blockchain development company. Many enterprises, known as blockchain-as-a-service (BaaS) companies, exist to create and maintain new blockchain networks and cryptocurrencies.

Some BaaS companies develop customized blockchains, while others use their own existing blockchain infrastructure. You can also work with a BaaS company to launch a highly customized token on an existing blockchain platform. Some of the most prominent BaaS companies include Amazon Web Services, Microsoft Azure, ChainZilla, and Blockstream.

Weighing the Benefits and Challenges of Cryptocurrency Creation

What to Know Before Making a Cryptocurrency

Anyone can create a cryptocurrency, even just for fun. But launching a cryptocurrency that is successful and gains value generally requires commitments of time, money, marketing, programming skills, and other resources. Making a cryptocurrency is the easy part if you choose a service that does it for you. However, maintaining and growing it over time is usually much more challenging.

If you are simply curious about crypto, then there’s likely no harm in creating your own token. Just make sure to avoid any activities that might be considered an initial coin offering (ICO) by the U.S. Securities and Exchange Commission, as you don’t want to violate any federal securities laws accidentally.

It’s also important to understand that there are many other coin and token projects, so you won’t be the only person or organization experimenting with making your own cryptocurrency or blockchain—competition will be fierce if you’re looking for a money-making opportunity.

The Bottom Line

While creating a cryptocurrency can be challenging, making one without too much effort or programming knowledge is possible. Before starting, it’s best to identify your goals in establishing one and what its purpose will be. In addition, evaluate the opportunities for taking either the technical and non-technical creation path. Also consider the commitment required for a crypto’s maintenance and growth. By assessing these factors, you can determine any legal constraints on your venture and the potential need for regulatory compliance.