How to create your crypto currency from scratch ?

By 03 May 2022

Well, with a bit of code, you can start by picking a blockchain platform, designing the nodes, and proceeding to integrate the APIs. We would go into each of the steps in detail in the latter part of this article.

What is a cryptocurrency?

Just like we have normal currencies that are used in exchange for goods or services, cryptocurrency is equivalent but in a digital platform. In addition, the physical currencies we have today can only be used in specific zones for trading. However, cryptocurrencies are universally accepted and can be traded from anywhere in the world. This is largely due to the fact that there is no single centralized platform that controls cryptocurrencies.

Also, cryptocurrencies are not in form of banknotes but rather coins. They could also be in the form of tokens, which are totally different from coins.

crypto currency

What is the difference between tokens and coins?

The major differences include:

  1. Tokens operate on existing blockchains while coins are part of a single blockchain.
  2. Tokens can’t buy coins, but coins can buy tokens.
  3. Coins can be used anywhere, but tokens are limited to a specific community or industry.

Tokens and coins are similar terms in cryptocurrency, but they are not the same.

How to make a cryptocurrency from scratch?

Creating a cryptocurrency is not as difficult as it looks from the outside. We have outlined the step-by-step processes you can follow:

Step 1: Decide on a Consensus Mechanism

The first step to take is to decide on the appropriate consensus mechanisms. Basically, they are protocols that are used to ascertain the legitimacy of a particular transaction and proceed to add it to the block.

Step 2: Select a Blockchain Platform

After settling with a consensus mechanism, you can proceed to pick the blockchain platform on which your cryptocurrency would be based. You can decide to write your own code to create a new blockchain that supports a native crypto currency or select an existing blockchain.

Keep in mind that the blockchain you select for your cryptocurrency would depend on the consensus mechanism you chose. Common examples of blockchain platforms you can use include: Ethereum, Waves (AAVES), NEM, IBM blockchain, Nxt (NXT), and more.

Ultimately, if you want a cryptocurrency that is truly innovative and new, building your own blockchain to support the coin is the best option. A good example of this is Bitcoin.

Step 3: Design the Necessary Nodes

Designing the nodes is to answer important questions. Examples are whether the permissions would be private or public, where the hosting would be (on-premises or cloud). This stage also determines the kind of hardware that would be required for execution.

Step 4: Establish the Blockchain’s Internal Architecture

Steps 1 to 4 are very crucial and might not be editable after launching the coin. Therefore, it is important that you take the time to be sure about every single decision and design. Establishing the blockchain’s internal architecture simply means addressing the nitty-gritty of the design and making decisions on important questions.

Examples include—what address format your blockchain would follow regarding exchanges between different cryptocurrencies without any third-party involvement.

Step 5: Integrate Necessary APIs

Depending on the blockchain platform you chose, you may need to intergrade the APIs. Some platforms provide pre-built APIs, while others don’t. If the platform you selected doesn’t provide one, you can get from 3rd party blockchain API supplies like Tierion, Colu, ChromaWay, and Gem.

Step 6: Proceed to Design the Interface

Another very important step is to design the interface of your cryptocurrency. No matter how good it is, without the appropriate interface, it would be of no use. For one, ensure that you design the external databases, web, and FTP servers with the possibility of future upgrades in mind. This includes the front-end and back-end programming. Bitcoin embodies this to perfection.

Step 7: Audit the Blockchain and its code

This step is for those who took the way of developing their own blockchain from scratch. At this stage, you should invite external blockchain auditors to thoroughly review the blockchain’s codes and identify possible vulnerabilities.

Step 8: Trash out the legality

There have been international cryptocurrency laws and regulations in the books for quite some time now. Therefore, it’d be wise to ensure your cryptocurrency is designed to abide by these laws. Also, you can check with a legal expert to ensure there are no current or future surprises that could crumble all your efforts overnight.

Legal compliance is becoming more important for cryptocurrencies by the day. Therefore, this step is one of the most important to the successful launch and running of your cryptocurrency. It should be done before minting the new cryptocurrency.

Is creating a cryptocurrency legal?

Creating your own cryptocurrency is legal in most places around the world. However, keep in mind that some countries and jurisdictions have partially or fully banned crypto in their area. For example, China has banned raising money through virtual currency since 2017. Also, all other cryptocurrency transactions have been banned.

Aside from that, there is a possibility of running into legal complications even in countries where it is legal. There is certain compliance regarding security regulations that your cryptocurrency would have to satisfy. These regulations vary from one location to another, therefore, it is important that you know what they are.

What are the benefits of building your own cryptocurrency from scratch?

There are several benefits of building your own cryptocurrency. These include:

  • It grants access to a new customer database.
  • Lower operational costs
  • Having your cryptocurrency gives transaction anonymity
  • Security for funds

After its launch, a successful cryptocurrency would gain value over time. However, it also requires the commitment of time, money, and other resources including technical knowledge. Building a cryptocurrency is the easy part. The hard part is maintaining and growing it over time.

More here : https://www.recomputation.org/