How to Create Your Own Cryptocurrency?

Bitcoin will do to banks what email did to the postal industry

Unless you’ve been avoiding the news completely in recent months, you’ve probably heard about the wild ride that's the cryptocurrency market. Bitcoin and Ether are experiencing huge swings in value on a day to day , while Dogecoin—created as a joke in 2013—has become a really real (if volatile) asset thanks partially to Elon Musk’s Twitter feed and his recent SNL appearance.

Meanwhile, China is cracking down on cryptocurrency trades and therefore the IRS is hunting down investors who haven’t reported profits from cryptocurrency holdings—so if you’ve sold or exchanged coins, you'll get on the hook for capital gains or income taxes.

If the thrill of playing armchair observer or amateur investor isn’t enough for you, you would possibly be wondering if it’s possible to leap in on the action by creating your own cryptocurrency. The short answer is yes, but there are quite a few different options to consider—and caveats to stay in mind—before you dive in.

Know the difference between a coin and a token

First, it’s important to know the difference between coins and tokens. Both are cryptocurrencies, but while a coin—Bitcoin, Litecoin, Dogecoin—operates on its own blockchain, a token lives on top of an existing blockchain infrastructure like Ethereum.

A blockchain is, at its simplest, a record of transactions made on and secured by a network. So while coins have their own independent transaction ledgers, tokens believe the underlying network’s technology to verify and secure transactions and ownership. generally coins are wont to transfer wealth, while tokens can represent a “contract” for nearly anything, from physical objects to event tickets to loyalty points.

Tokens are often released through a crowdsale referred to as an initial coin offering (ICO) in exchange for existing coins, which successively fund projects like gaming platforms or digital wallets. you'll still get publicly available tokens after an ICO has ended—similar to purchasing coins—using the underlying currency to form the acquisition .

Anyone can create a token and run a crowdsale, but ICOs are often murky if creators take investors’ money and run. Some ICOs are considered securities and are therefore are regulated by the Securities and Exchange Commission, which cautions investors to try to to their research before buying tokens launched in an ICO. The SEC is increasingly cracking down on fraudulent ICOs.

At the time of writing, CoinMarketCap lists quite 5,200 coins and tokens available on public exchanges. Not all tokens made it to exchanges, however — Etherscan, which provides Ethereum analytics, has quite 403,000 contracts in its archive. In April 2018, that total was just 71,000.

The idea behind cryptocurrency is that the underlying code is accessible to everyone—but that doesn’t mean it’s easy to know . Here are the paths to making your very own coins and tokens.

Build your own blockchain—or fork an existing one

Both of those methods require quite little bit of technical knowledge or the assistance of a savvy developer. Because coins are on their own blockchains, you’ll need to either build a blockchain or modify an existing one for your new coin.

The former takes serious coding skills, and albeit tutorials and online courses exist to steer you thru the method , they assume a particular knowledge level, and you generally don’t finish the method with a totally functioning coin that’s ready for public exchange.

Alternatively, you'll fork an existing blockchain by taking the open-source code found on Github, making a couple of changes, and launching a replacement blockchain with a replacement name (like Garlicoin, which is forked from Litecoin). Again, this needs you to know the code so you recognize what to switch and why.

Launch a coin or token on an existing blockchain

For the typical one that doesn’t know the ins and outs of coding, a creation service that does the technical work and delivers your finished coin or token back to you is one option. for instance , WalletBuilders features a free coin launch tool for those that just want to experiment with the method , also as a paid package (0.0023 BTC as of this writing) that makes a functional coin. Rally is an invite-only platform for coin creation that’s built on the Ethereum blockchain.

You can also create a token—what is actually a sensible contract—with or without a public ICO. Because tokens can represent any asset, you'll even create a token with no real value or serious purpose aside from to exchange among friends.

This is faster, simpler, and cheaper than creating a coin because it doesn’t require the time and energy to create and maintain a replacement or forked blockchain, and instead relies on the technology already in use for Bitcoin or Ethereum.

A common product is an ERC-20 token, the quality for those built on the Ethereum blockchain. The code for these token contracts and crowdsales is additionally available for the very ambitious, and there are user-friendly tutorials and YouTube videos also as platforms which will walk you thru the method of making a token in only a couple of clicks.

This generator on Github, for instance, simply requires you to put in MetaMask (a blockchain utility for purchasing , exchanging and storing tokens) and enter a couple of details as outlined during this video tutorial about the token you’re launching. There’s a free option if you don’t care much about customization, and plans with more control cost up to 0.75 ETH as of this writing.

If you’re crypto-curious, there’s no penalty to experimenting with token contracts. Start with an ERC-20 token that you simply can distribute to your friends then take advantage to whoever buys drinks at the bar. There’s no price or commitment attached, but this may assist you understand the technical aspect also as how tokens work. An ICO probably won’t be appropriate for the casual observer due to SEC regulation and steep penalties for misrepresentation.

Not all cryptocurrencies are worth real money

The technical creation of a cryptocurrency isn’t actually the toughest a part of launching a successful crypto project. the important work is in giving your coin or token value, building the infrastructure, maintaining it, and convincing others to shop for in, which needs a team of developers and staff. With the proper support and promotion, even memecoins can garner real value (again, consider Dogecoin).

That said, many cryptocurrencies are unsuccessful, or maybe questionable from a legal standpoint, whether because the ICO wasn’t created in straightness or the coin did not generate lasting interest.

Before you go beat on a possible shitcoin, research all the small print of the project for yourself. Don’t rely solely on what’s popular within the news or what your friends say. Crowdsourced online forums are an honest place to seek out up-to-date information on what’s real and trustworthy and what isn’t—though ultimately, the sense is king.