How-To

How To Start Your Own Cryptocurrency – An Absolute Beginner’s Guide

how to start your own cryptocurrency

Demand for cryptocurrencies is quite high and if you are an expert observer of Bitcoin, Dogecoin and other increasingly popular cryptocurrencies, you might wonder whether investing in cryptocurrency is a good option or not.

Well, it is indeed a good option to earn money and make a partial living out of it. But, there are different options to consider and several factors to keep in mind before you dive deep.

Current Market Space of Cryptocurrency

As the tech literacy of our generation and current population increases, acceptance to digital ways of leading life and doing things have increased and thus, Cryptocurrencies have found a new space in this profound technological evolution. People who were once skeptical about Bitcoin and the like are slowing involving themselves in cryptocurrencies and mining.

Since 2011 countless Bitcoins have emerged in the market, somewhat spoiling Bitcoin’s crypto market cap dominance. These are called altcoins and they are gaining the market at a rapid speed.  A year and a half ago the market cap of entire crypto space was 20 billion and in just 4 months it increased to $30.9 billion.

The Currencies, Stocks, and Exchanges

The currencies are usually referred to as ‘Fiat’ by the cryptocurrency community. Cryptocurrency has several resemblances of stock. When you purchase cryptocurrency, you are basically buying some tech stock, which is a part of the network and part of Blockchain.

You can buy and trade your cryptocurrency at cryptocurrency exchange. They are the places where you may like to buy or trade your currencies using Fiat. Not all Exchanges prove to be the right place; in fact, there are several factors that determine the reliability and quality of an Exchange, including fees, purchase, liquidity, spread, insurance, withdrawal limits, security and trading volume, and user compatibility.

We recommend you to choose an Exchange that is user-friendly and that provides enough guidance to beginners.

The Difference between Coins and Tokens

Both are cryptocurrencies. However, coins, such as Bitcoins, Litecoin etc. operate on their own blockchain, while a token lives on top of a blockchain infrastructure, like Ethereum.

In layman’s terms, a Blockchain is a record of transactions made on a secured network. Coins rely on independent transaction ledgers and are used to transfer wealth in general.

On the other hand, tokens represent an agreement for almost anything, including loyalty points, physical objects, and even tickets. Tokens generally rely on underlying technology to secure transactions and confirm ownership.

Tokens, such as Ethereal can be released in exchange for existing coins through a crowded sale, ICO (Initial Coin Offering). These tokens can be used to fund projects.

So, What Is In a Coin?

Most cryptocurrencies are here not to replace the traditional forms of currency but are rather utility-based coins.

Although, we reflected that coins are similar to stock, unlike a stock, which gives you a share of ownership in a company, utility tokens give buyers access to products and services the company has or hopes to offer.

Cryptocurrency Wallets

Currency Exchanges have inbuilt wallets that help you store your purchased coins. If you do not wish to keep your cryptocurrencies on the exchange, you get two options. One, you can use a paper wallet service, and two you can spend a little money and buy a hardware wallet. Both keep your currencies safe and serves you by removing platform risks.

If you want to transfer your crypto from exchanges to your hardware wallet for long-term storage, please follow the following steps. (The steps may alter depending upon the exchange type and feature. This is an example generated using Coinbase and KeepKey):

  • Plug into your hardware wallet USB cable (Keepkey)
  • Open your KeepKey client on Google Chrome under Apps menu
  • Search for your wallet address on KeepKey Client UI
  • Now Access your Coinbase (Exchange) ‘Send/Request Tab’ and fill in space with your Hardware Wallet Address
  • Confirm the amount you want to transfer and click ‘Send Funds’

Okay, here is a tip – start with a tiny amount as a test before sending anything in bulk. You don’t want to lose the amount if an error occurs, do you? Note that a small network transfer fee will be charged.

Hardware wallets are much better than wallets in Exchanges. They are more like your bank and pose as a tangible reminder of your crypto holdings. If you end up participating in ICOs in the future, your hardware wallet will make more sense to you its user interface makes it easy to store multiple types of coins.

You Can Either Build Your Own Block Chain or Modify an Existing One

Okay, you would definitely require some kind of technical knowledge to try both of these methods. Or you can ask an ultra-smart developer to help you. You have to either build your own blockchain or modify an existing one for your new coin. This is because coins have their own block chains and cannot operate in a pre-existing type.

If you want to create your own blockchain, you will have to take serious tutorials in coding skills to help you walk through the process. However, how effective this will be no one can assure you.

Alternatively, you can fork or modify an existing blockchain simply by taking the open-source code on Github, make few alterations and launch a brand new blockchain with a brand new name. Again, this also requires you to understand coding to know what to modify and what not to.

Launching a Coin or Token – Use a Cryptocurrency Creation Platform

If you are one among us, an average person with limited technical knowledge, you can seek out for a creative service provider and let them do the technical work and deliver your finished coin back to you. All you have to do is enter the parameters and let the service provider build a custom coin for you. You can provide them the details, like logos, number of coins awarded for signing the block and so on. You can also choose a pre-built template and make everything easier. The price generally starts at 0.01 BTC.

Just like coins, you can also personalize and create a token, essentially a contract with or without ICO. What’s more interesting about tokens is you can create a token with no real value or serious purpose other than to exchange it among your near and dear ones. This is only possible with tokens because they generally represent an asset.

Creating tokens are faster and simpler, and cost-effective than creating coins. Coins require a critical amount of time and effort to build and maintain new or fork existing blockchain, while token relies on the technology that is already in use by Bitcoin or Ethereum.

Here Is a List of Things You Need to Know More About Owning Cryptocurrency

A Team of Experts Will Be a Help

In future coins are supposed to clearly communicate their purpose to potential investors as well as to the Security and Exchange Commission. Coins will be treated like any security and a lot of things will have to be done by you, such as you will have to have a prospectus, you will have to download information and people will be able to see the risks attached with it.

Furthermore, you would need a team of advisors with marketing experience, good rapport with high-profile investors who can give credibility to the project and cryptocurrency insiders for great insights and statistics.

Andy Bromberg, CEO of CoinList, a website that runs token sales, remarks, “Launching an ICO is a deeply technical process, but high-level the process looks a lot like starting a start-up”.

Sell and Build Your Coins

You can also use white papers to communicate the goals of the coins, like many other coin offerings. The content of the whitepaper can change depending upon the purpose, such as complex technical details that describe the blockchain code, and high-level problems and solutions.

A pitch desk can also be used to present your coins to potential investors. Pitch Desk is a brief description of the coin, a high-level presentation of the intentions and purpose of the coin, and a list of investors for the coin.

Monica Quaintance, a lead technology developer for Kadena, says “In order to have a robust platform, one that can really support a good project, you need four important elements: You need speed, you need safety, you need scalability and simplicity.”

Piquing up interest and support in the crypto community, although important, is often not enough and will not get you far. Each coin would need its own supporting code to live and transact in the blockchain.  Only a filed developer with cryptocurrency experience can accomplish this task brilliantly.

And the good news is the field of such professionals is rapidly blooming.

Finally, Make It Legal

Since the regulators are paying attention, both the investing market and issuing market need to be on the run. As the cryptocurrency realm is slowing bursting and maturing, regulators are coming in to secure the investors from fraudulent activities. So, you have to be ready to answer any legal question, such as questions about the business model, how the coins will be used and so on.

Since everything is being made legal, from now on we will see less of low-quality deals as compared to the past few years.

That’s all for now we have.  We will create more blogs on cryptocurrencies in the future. If you want us to focus on a particular topic, do let us know in comments and we will ensure to talk about it.