The emergence of the blockchain technology that has facilitated Bitcoin and other cryptocurrencies has captured the attention of many ambitious people.
Some see it as an opportunity to trade in a new form of asset and treat it as a golden opportunity to challenge their skills on the global exchange in the hopes of striking gold.
Others aim at striking gold in the more literal sense. Mining for Bitcoins if of course not literal mining, but with the right equipment and enough time, it is indeed possible to strike gold.
Then there are those who decide on creating their own cryptocurrencies. But how exactly does one go about doing that?
It does not necessarily take a life-long career in cryptography and data science to be able to create your very own cryptocurrency.
There are a few things to be aware of, however.
Coins or Tokens?
An important distinction to be aware of is the difference between coins and tokens. Whilst both are indeed considered cryptocurrencies, they are not the same thing.
Cryptocurrencies with the word ‘coin’ in them (like Bitcoin, for example) are typically created by companies that have developed their own blockchain.
Tokens, which do no necessarily have the word ‘token’ in them, are cryptocurrencies that make use of another developer’s blockchain – with their permission, of course.
A good analogy for tokens is to consider Internet providers. One telecoms company might own the landlines, but other ISPs can use them to service their customers in return for a fee paid to the owner of the cables.
While coins can be considered a standalone currency, tokens are usually tied to a specific product or a service.
These tokens are usually given to investors in ICOs (Initial Coin Offerings) and can be redeemed for whichever product or service the team behind the ICO is offering.
Because tokens are often tied to an ICO, it is possible to purchase tokens with coins, but not vice versa.
How do you create a coin?
If you want to create a coin, you will have to develop your own blockchain.
A blockchain, put simply, is a record of transactions made on, and verified by, the decentralized network.
You can create a blockchain in several ways. One is to code one yourself – this takes a lot of skill.
There will be many online tutorials on how to do this, but it will still require some knowledge in coding for it to work.
Another way is to hire a developer, If this is too expensive, you can always use someone else’s blockchain code (by looking in open source directories) and modify it.
Too difficult? Consider creating a token
A token is, although limited in its use, requires fewer coding skills. You have to have a great idea, and then launch an ICO.
You still need to have a great business idea to entice people to pitch money into what is essentially a crowdfunding campaign.
There is always the option of using a company like CryptoLife, which can build an actual coin for you in return for a fee.
Finally, there is the option of creating a token without an ICO or blockchain – simply a smart contract you can use in your own social circle.