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How to Get Started on Creating Your Own

Cryptocurrency

May 13th 2021 297,547 reads 

@oleksii.she
Oleksii Shevchenko

Cryptocurrency is one of the words you can’t avoid these days. News, blogs and even big-time
financial authorities obsess over it, and by now everyone has to admit: the world is changing in front of
our eyes. Miss this bandwagon now and you will be left so far behind that you might never recover.

So, here you are with this great new business idea or getting ready to launch a startup, and you want
to embrace the fascinating opportunities of the new world and create your own cryptocurrency. But
how exactly does one do that? The Internet is full of information but, as it often happens, it’s
contradicting, spattered all over the place, and sometimes simply hard to understand due to heavy
industry jargon.

After reading this article you will know exactly what a cryptocurrency is, how a token is different from a
coin, how to make your own cryptocurrency and whether your business needs it.

Difference Between Token and Coin

Before we dive into the technicalities of how to create your own cryptocurrency, we should set our
facts straight and take a look at some basic definitions used in all cryptocurrency-related
conversations.

So, what is a cryptocurrency?

Let’s take a step back and refresh in memory a definition of a currency first. While we tend to think
about currencies in terms of banknotes and coins or dollars and euros, a currency is a unit of storage
and account and a means of exсhаnge, i.e. a universally accepted way to obtain goods and services
as well as to store and distribute wealth.
Now, a cryptocurrency can be defined as a digital currency relying on encryption to generate new units
and confirm the transactions. It has all the functions of the currency with the difference of running

outside of a single centralized platform (such as a bank).

Cryptocurrencies don’t have banknotes but they do have coins, which are often confused with tokens.
So what exactly is the difference between them? Simply put, it all comes down to these three points:

Coins require their own blockchain while tokens can operate on the existing ones.Tokens are limited to
a specific project; coins can be used anywhere.Coins buy tokens but tokens can’t buy coins.

If you want to put tokens and coins in a real-life context, think about tokens as your Frequent Flyer
Miles while coins are actual money: you can use both to get an airplane ticket, but with the miles your
choice will be limited to the air company that issued them, while with the money you can take your
business anywhere you want.

The bottomline is that you need to build a blockchain if you want to create a crypto coin.

Benefits of having your own cryptocurrency

In some cases it’s a no-brainer: if your project or startup requires its own blockchain, you need to
create your own digital currency to incentivize the nodes contributing their processing power. One
more word on blockchains here: many authoritative business analysts foresee a big future and a
growing list of the markets and industries where the blockchain technology will significantly disrupt the
status quo and generously reward the early adopters. The good news is that for many fields the
blockchain technology has never truly arrived yet so it’s not too late to join the ranks of pioneers.
The other important aspect is that when you decide to start a cryptocurrency you get a whole set of
powerful marketing tools and consumer benefits which will help you differentiate yourself from the

competition. Here is a list of the most significant advantages:

Eliminating fraud risks — cryptocurrency is impossible to counterfeit and no party can reverse past
transactions.Providing transaction anonymity — customers decide what exactly they want sellers to
know about them.Cutting down operating costs — cryptocurrency is free from the exchange or interest
rates, as well as the transaction charges.Offering immediate transactions — state holidays, business
hours or geographic location of the parties don’t affect cryptocurrency.Ensuring an immediate pool of
potential customers — now you can make business with those without an access to traditional
exchange resources. No more trade restrictions in any markets.Providing security for their funds —
since cryptocurrency is a decentralized system, there is no Big Brother figure like banks or
government institution that can seize or freeze your assets.How to Create a Blockchain

Now that you know how your own cryptocurrency can boost your business, let’s see the main steps
you need to take to build a blockchain.

Step 1. Know your use-case.

Do your business interests lay in smart contracts area, data authentication and verification or in smart
asset management? Define your objectives clearly at the very beginning.

Step 2. Choose a consensus mechanism.

For your blockchain to operate smoothly the participating nodes must agree on which transactions
should be considered legitimate and added to the block. Consensus mechanisms are the protocols
that do just that. There are plenty to choose from for the best fit for your business objectives.

Step 3. Pick a blockchain platform.

Your choice of a blockchain platform will depend on the consensus mechanism you’ve selected. To
give you a better idea of what is out there, here is a list of the most popular blockchain platforms:

1. Ethereum (market share — 82.70%)

2. Waves (WAVES)
3. NEMNxt (NXT)
4. BlockStarter
5. EOS
6. BitShares 2.0
7. CoinList
8. Hyperledger Fabric
9. IBM blockchain
0. MultiChain
1. HydraChain
2. BigChain
3. DBOpenchain
4. Chain Core
5. QuorumIOTA
6. KICKICO

Step 4. Design the Nodes

If you imagine a blockchain as a wall, nodes are the bricks it consists of. A node is an Internet-
connected device supporting a blockchain by performing various tasks, from storing the data to
verifying and processing transactions. Blockchains depend on nodes for efficiency, support, and
security.

There is a number of choices you have to make about the

nodes you will employ:

1. What are they going to be in terms of permissions: private, public, or hybrid?

2. Will they be hosted on the cloud, on premise or both?Select and acquire necessary hardware
details, such as processors, memory, disk size, etc.
3. Pick a base operating system (most common choices would be Ubuntu, Windows, Red Hat,
Debian, CentOS, or Fedora)

Step 5. Establish your blockchain’s internal architecture

Tread carefully as some of the parameters can not be changed once the blockchain platform is
already running. It’s a good idea to take your time and really think through the following:

Permissions (define who can access the data, perform transactions and validate them, i.e. create
new blocks)
Address formats (decide what your blockchain addresses will look like)
Key formats (decide on the format of the keys that will be generating the signatures for the
transactions)
Asset issuance (establish the rules for creating and listing all asset units)
Asset re-issuance (establish the rules for creating more units of the open assets)
Key management (develop a system to store and protect the private keys granting the blockchain
access)
Multisignatures (define the amount of keys your blockchain will require to validate a transaction )
Atomic swaps (plan for the smart contracts enabling the exchange of different cryptocurrencies
without a trusted third party)
Parameters (estimate maximum block size, rewards for block mining, transaction limits, etc.)
Native assets (define the rules of a native currency issued in a blockchain)
Block signatures (define how the blockchain participants creating blocks will be required to sign
 them)
Hand-shaking (establish the rules of how the nodes will identify themselves when connecting to
each other)

Step 6. Take care of APIs

Make sure to check whether the blockchain platform of your choice provides the pre-built APIs since
not all of them do. Even if your platform doesn’t come with those, not to worry: there are a lot of
reliable blockchain API providers out there.

Step 7: Design the Interface (Admin and User)

Communication is the key and a well-thought-out interface ensures a smooth communication between
your blockchain and its participants.

Here are the things to consider at this stage:

1. Web, mail and FTP servers

2. External databases
3. The front-end programming languages (e.g. HTML5, CSS, PHP, C#, Java, Javascript, Python,
Ruby).

Step 8. Make your cryptocurrency legal

Slowly but surely the law is catching up with the cryptocurrencies and you better protect yourself from
any surprises by looking into the trends around the cryptocurrency regulations and the direction they
are headed.

Bonus step for overachievers: Grow and Improve your Blockchain

You’ve come so far, don’t stop now. Get a headstart into the future and think how you can boost your
blockchain by tapping into the future-proof technologies like the Internet of Things, Data Analytics,
Artificial Intelligence, Cognitive service, Machine Learning, Containers, Biometrics, Cloud, Bots and
other inspiring developments.

Bitcoin Forks as an Alternative to Building Your Own

Blockchain

As you can see, it takes a lot of time, resources, and particular skills to build a blockchain. So what
can you do if you don’t possess all of the above but still want to build your own cryptocurrency? Then
it’s time to talk about Bitcoin forks.

How to Create a Bitcoin Fork?

It’s time for another basic definition to make sure that we speak the same language.

What is forking in cryptocurrency?

In layman’s terms, a blockchain fork is a software update. All blockchain participants (aka full nodes)
run the same software and it’s crucial that they run the same version of that software to be able to
access the shared ledger to verify transactions and ensure network security. Therefore, every time you
want to change your blockchain parameters or introduce new features, you will need to create a fork.

What is the difference between hard and soft forks?

Forks can be divided into hard and soft.

Hard forks require 90% to 95% percent of the nodes to update their software; the system will no longer
accept the nodes running a non-updated version.

Soft forks are less demanding. Simply a majority of the nodes is required to update the software and
those who run a previous version can continue to operate.

What are Bitcoin forks?

Now, the Bitcoin forks are the changes in the Bitcoin network protocol. Since the Bitcoin code is an
open-source protocol, it is a low-lift exercise for those who want to create their own cryptocurrency
and built on the existing by adding new features or addressing current imperfections.

How to create a Bitcoin fork?

Option 1. Use a fork coin generator.

If you don’t have any programming skills, services like ForkGen might be a perfect solution for you.
ForkGen is an automated fork coin generator where anyone can create a unique Bitcoin offshoot by

changing some parameters and rules.

Option 2. Do It Yourself.

If you want to take a hardcore way to create a Bitcoin fork and aren’t afraid to get your hands dirty,
follow these steps:

1. Go to Github, find, download and compile Bitcoin code on your computer.

2. Then, the programming part starts: you’ll have to reconfigure the Bitcoin code, implement your
customization.
3. Publish the code (open source) back to Github.
4. Provide a website and some kind of documentation (normally a white paper).Bitcoin forks:
success stories

Bitcoin forks are worth exploring if you want to start your own cryptocurrency leveraging the social and
financial capital around the Bitcoin name. Some examples of successful Bitcoin forks include:

LitecoinBitcoin
CashBitcoin
GoldMain
Recapping the Steps of How to Make Your Own Cryptocurrency

To sum it up, you have two ways to go about starting your own cryptocurrency: build a blockchain or
create a fork.

To build a blockchain you need to:

1. define how it will be used in your business model

2. decide upon a consensus mechanism
3. choose a blockchain platform
4. design the nodes and blockchain properties
5. provide APIs for the tasks executed on your blockchain
6. develop intuitive and comprehensive Admin and User Interfaces
7. take care of the legal side of the business

To create a Bitcoin fork you can either:

Use an automated fork coin generator like ForkGen

Or:

1. Download the Bitcoin code

2. Customize it
3. Publish and maintain your code.
Starting a New Cryptocurrency: Is It Worth the Effort?

Having read this far, you already have a fairly clear picture of what it takes to create a new blockchain.
Before starting any new complex project it’s always a good idea to take a deep breath and evaluate
once again if this is something you should be investing your time and money in.

So, how to decide if you even need a blockchain in the first place? Here is a list of questions that will
help you to answer this question before you make this commitment.

1. Do you need data storage?

2. Do your requirements reach beyond what a traditional database can provide?
3. Do you have multiple participants updating the data?
4. Are you looking to eliminate a third-party?
5. Do you want to establish a safe environment for the parties that don’t trust each other?
6. Is your environment going to have hard rules requiring little to no updates?
7. Do you need to maintain the privacy of your data?

If you’ve answered “yes” to 3 and more of these questions, you will get all the benefits of a blockchain
including:

Enhancing data security.

Cutting down transaction costs.
Preventing frauds.
Improving efficiency.
Providing transparency.
Executing Smart Contracts.

While the benefits are numerous, the amount of work that goes into creating your own blockchain is
significant and requires a wide range of knowledge and tools to execute all steps of the process in the
most time- and cost-efficient way.
Having employed the help of professional developers you will significantly cut down your expenses in
the long run by eliminating the room for errors, and, therefore, time and cost of the rework and
updates; future-proof your solutions by working with the experts who stay on top of all the latest
industry developments and innovations, and free up your time for growing your business.

Originally published on the Ezetech blog

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by Oleksii Shevchenko @oleksii.she.

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