How to create your very own cryptocurrency at home
You have been dabbling in cryptocurrencies for years now. You own a little bit of Bitcoin, some Litecoin, and even some Ether. Now you wonder what it would be like to have your own coin. Well, guess what? You don't have to be content to wonder. You can actually create your very own cryptocurrency right from home. You only need a basic understanding of the blockchain principal.
One of the many benefits of cryptocurrency is that most platforms are open source. The open source model allows anyone and everyone to take existing code, study it, modify it, and even re-release it as an entirely new project. This is extremely helpful for crypto creators because they do not have to reinvent the wheel. They don't have to build their platforms from the ground up.
Now, do not misunderstand. You are not going to get a crypto platform up and running and worth millions overnight. You are also not going to be that successful if your understanding of blockchain is rudimentary. To create something as successful as Bitcoin requires a bit more knowledge and skill. But for the purposes of your own entertainment or to facilitate local commerce among you and your friends, you can create your own crypto in less than a day.
Start with a Foundation
The first step in creating your own cryptocurrency is to choose a platform as your foundation. Many cryptocurrencies now on the market were built from the Bitcoin core. Do not make that same mistake. Bitcoin's core has some inherent flaws that just don't allow it to keep up with the pace of blockchain evolution. You are better off choosing another platform.
Here are a few suggestions:
- Ethereum - Ethereum is a blockchain platform rather than a cryptocurrency platform. It just so happens that it supports a coin known as Ether. The advantage of this platform is that it can be used for a variety of things other than financial transactions. You might find it very helpful depending on your reasons for creating a crypto.
- EOS - EOS is a blockchain platform, cryptocurrency, and trading protocol all in one. It is also a decentralized platform that, if you wanted, is capable of being the foundation of large, enterprise-level decentralized apps.
- Cardano - This platform was originally designed to run financial applications via blockchain. Its token is known on exchanges as ADA. You can use Cardano to create both your own blockchain and a financial application for trading it.
- TRON - The TRON platform was built for decentralized data storage for the entertainment industry. Its TRX coin is that which gives users access to its associated apps. You can use the platform in much the same way.
- WAVES - WAVES is probably your second-best choice behind Ethereum. The strength of this platform is that it consists of an entire ecosystem supporting not only blockchain but the creation of custom tokens and smart contracts. It is almost a turnkey solution for amateurs.
The five platforms listed here are only suggestions. There are many more to choose from, some based on the Bitcoin core and others based on Ethereum. Your best bet would be to educate yourself on the various platforms and their strengths and weaknesses.
Download the White Paper
Once you think you might know what platform you want as your foundation, the next step is to download the platform's white paper. The white paper is where you'll find all of the nitty-gritty details. It will explain everything from blockchain structure to how transactions are processed and verified.
One of the big things you want to pay attention to is how transactions are verified by coin miners. Why? Because the solution found in the white paper will have a great deal of influence over many aspects of your cryptocurrency.
Bitcoin relies on a function known as proof-of-work (PoW). Under this model, computer nodes must perform some sort of work in order to verify transactions. That work is a complex mathematical calculation based on the data contained in transaction records. PoW is effective enough, but it is slow and resource-hungry. The bigger the blockchain grows, the harder the work becomes as well.
There are other choices:
- Proof of Capacity (PoC) - Under this model, nodes on the network must set aside a certain amount of disk space to do transactional work. They must verify they have enough capacity before they are allowed to add blocks to the chain.
- Proof of Authority (PoA) - Under the PoA model, computer nodes must submit some sort of proof indicating they are authorized to process transactions. This model is not all that welcome in the cryptocurrency community because it raises questions of centralization.
- Proof of Stake (PoS) - The PoS model requires miners to actually possess tokens before they are allowed to validate blocks. This is arguably the second most popular model behind PoW. Things are kept in check by randomly awarding each successive block in the chain to a different miner based on the number of tokens that miner possesses.
The four models mentioned in this section are all considered consensus algorithms. Note that a consensus algorithm is the mechanism by which cryptocurrency transactions are verified and added to the blockchain. The 'consensus' component indicates that all the nodes on the network must agree before the next block in the chain can be validated. Consensus algorithms are designed to facilitate that agreement.
Modify the code
So, you have completed the first two steps. You have chosen the platform and read the white paper. Now you are ready to move forward. The next step is to modify the code. Fortunately, some of the best platforms do not require you to actually dig in and change a lot of things. Many of them allow you to fill out a simple, online form and then download the code.
A typical form might ask you for the name of your new cryptocurrency, the total number of coins you eventually want in circulation, and a few more details. An automated system takes the information you provide and applies it to the platform code. Then just download and off you go.
If you want to make specific modifications to fit your project, you can download the platform code straight up. Most platforms are available on GitHub. Just know that going this route requires more than just a basic understanding of blockchain. You are going to have to know some code to make any serious modifications.
Also note there are a small number of commercial enterprises willing to create a cryptocurrency for you. These companies operate what is known as a blockchain-as-a-service (BaaS) company. You can choose from a number of prepackaged cryptocurrency platforms they will modify to meet your needs, or you can have them build a project from scratch.
Tell others about it
Finally, you have to do something with the code you downloaded. If you leave it on your hard drive and do nothing with it, your cryptocurrency is essentially useless. Why do that? Obviously, you are going to want to tell others about it.
Your best bet in this regard is to write your own white paper. You can use the platform white paper you read previously as a starting point. However, don't copy it. Experienced cryptocurrency users can spot a copied white paper fairly easily. There is no need to jeopardize your cryptocurrency by being accused of plagiarism.
If you are not familiar with white papers, they are fairly simple in principle. The intent of a white paper is to present a problem or challenge, explain your solution to that problem or challenge, and then offer evidence as to why your solution is worthwhile. You should be able to find all of these elements in the white paper you read previously.
Do not forget to publish your white paper online once you are done writing it. Then be prepared for lots of questions. People will want to know exactly what you have in mind - whether your project is just a hobby or a serious endeavor. You will need to be able to explain yourself clearly.
You now have a cryptocurrency
Provided you have followed all of the steps outlined in this post, you now have your very own cryptocurrency. Use your tokens for whatever purpose you created them. Maybe you want to establish some sort of local enterprise consisting of you, your friends, and your neighbors. Maybe you have an application in mind. You can designate your tokens as a means of funding the development of that application.
The beauty of cryptocurrency is that you can make it whatever you want it to be. Yes, cryptocurrencies can be monetary systems like Bitcoin. But they don't have to be. Cryptocurrency tokens can be used for all sorts of things. You really are limited only by your own imagination.
Now you know how to make your own cryptocurrency. What do you think? Are you ready to give it a go? If so, good luck. You will certainly be in good company.