How Hard Is It to Create a Cryptocurrency? – MUO – MakeUseOf
With so many cryptocurrencies in existence, it must be incredibly simple to make one yourself, right?
Today, there are almost 20,000 different cryptocurrencies in circulation. Things have come a long way since Bitcoin launched in 2009, and the market is now truly saturated with an endless choice of coins and tokens to invest in. So, does this mean that it's relatively easy to make a cryptocurrency? Just how hard is it to develop and launch your own coin or token?
The answer to this question depends on what you're trying to create. Do you want a coin with its own independent blockchain, or are you simply looking to create a token to be used within a decentralized project? Maybe you're just curious to see how quickly you can create your own crypto.
Whatever your intention, the time it takes to create a crypto can range from less than an hour to weeks or months. But why is this? Let's start with token development.
When you create a cryptocurrency token, you are using a pre-existing blockchain, like Ethereum or Zilliqa, to do so. Tokens are based on a smart contract and use the consensus mechanism of the blockchain they're built on. They often have a purpose in relation to a project. For example, a token could be used to pay for services within a decentralized app (DApp).
Creating a token is generally a lot easier than creating a coin from scratch. You can literally create one during your lunch break because you don't need to develop a blockchain or have it audited, nor do you need to define your consensus mechanism. However, there are still a number of things you need to carefully define and consider in the token creation process, especially if you want your coin to survive long-term in the market.
When developing your token, you need to determine what properties your token is going to have, including:
It's important that you already have a decent knowledge base on cryptocurrency if you want to create a successful token. The more unique you want your token to be, the more work you'll have to do.
Next, you'll need to develop the token's smart contract. This is most commonly done using Ethereum's ERC-20 or Binance Smart Chain's BEP-20 token standards. In this part of the process, you should consider how your chosen smart contract will affect your token. Some smart contracts don't allow you to alter your token's properties at all, while others do. Some contracts allow for staking, some don't.
If you create a token on a popular pre-existing blockchain, you may also be able to benefit from the already established large user base on the platform, meaning your project or token may have an easier time gaining traction. You'll also benefit from the blockchain's security features without worrying so much about 51% blockchain attacks or similar threats.
If you're simply curious about the token creation process or don't need a unique token, you can just copy provided code and have your crypto ready for trading in five minutes. There are plenty of sites and tools that provide source code for developing a token, including EOS. The EOS blockchain protocol offers users a way to create EOSIO tokens that you trade like any other crypto (but just because your coin exists doesn't mean it'll instantly have value).
So, the process of token development can be incredibly easy, but things get a little trickier when it comes to developing coins.
Developing a crypto coin requires an entirely new blockchain, which can be very technical and time-consuming. You can hire a blockchain developer to do this, but it can be pricey and doesn't give you total control of the coin's development. However, on the other hand, hiring a developer could save you a lot of potential trouble in the future, as it's more than easy to miss crucial flaws in your code that could cause problems later on.
If you want to create unique code for your coin's blockchain without the help of a developer, you'll definitely need in-depth knowledge of coding, cryptocurrency, and blockchains themselves. Creating a crypto from scratch in this way will involve a list of important considerations, including:
The consensus mechanism of your blockchain and coin will affect the energy consumption, verification process, and transaction fees or times within the network. It forms one of the most important elements of your cryptocurrency, so it's crucial that you're knowledgeable of whichever mechanism you choose and how it'll affect your coin.
In terms of blockchain structure, you must consider the size of your blocks. Generally, a larger block size gives way to faster transaction times and can even reduce fees. You'll also need to determine whether you want a public or private blockchain. Most cryptocurrencies exist on a public, peer-to-peer blockchain network, as it provides higher security levels and more transparency. Though public blockchains are more prone to latency (or transaction backlogs), they're the better option for cryptocurrency.
Creating a coin from scratch is complex, but this isn't your only option.
Some big crypto coins have been developed by simply copying another big coin's code. Dogecoin's code, for example, was based on a hard fork of Litecoin, the code of which was largely based on that of Bitcoin, the original cryptocurrency. It's not uncommon for crypto developers to copy the code of already established coins and alter them slightly to fit their goals because, at the end of the day, if it's not broken, why fix it?
Creating a fork is pretty popular for those who want their own crypto coin without starting from scratch. Consider Bitcoin Cash, for example. This cryptocurrency was developed via a Bitcoin hard fork, where the blockchain was split into two, with the Bitcoin blockchain remaining the same and a new protocol giving way to the Bitcoin Cash blockchain.
You should also ensure that your cryptocurrency is legal for trade, spending, etc., before you launch, as not doing this can create problems down the line.
All in all, the process of cryptocurrency development varies depending on your goals and intentions. If you're looking to develop a unique cryptocurrency with a purpose-built blockchain, you've likely got your work cut out. But crypto creation by no means has to be difficult. Some widely successful coins and tokens were created in a matter of hours! It really all comes down to purpose and features.
Katie is a Staff Writer at MUO with experience in content writing in travel and mental health. She as a specific interest in Samsung, and so has chosen to focus on Android in her position at MUO. She has written pieces for IMNOTABARISTA, Tourmeric and Vocal in the past, including one of her favourite pieces on remaining positive and strong through trying times, which can be found at the link above. Outside of her working life, Katie loves growing plants, cooking, and practicing yoga.
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