So you’ve heard of Bitcoin, Ethereum, and maybe other cryptocurrencies that have taken the world by storm. You’re looking to get involved somehow… What if you created your own cryptocurrency?
It’s a radical idea – creating your own money – perhaps that’s why, as we mentioned in our future of cryptocurrency article, crypto was the best performing asset class of the 2010s. However, if you know how to create a cryptocurrency, your radical idea can become reality.
How to Create a Cryptocurrency: Business Considerations
Before jumping right into the development of your own crypto, there are some key business-related decisions you’ll want to consider if you want your project to be more than just a fun project.
1. Define a purpose for your cryptocurrency
If you’re going to create a cryptocurrency, there should probably be a reason for its existence. Otherwise, what reason do people have to use it?
Nano is an example of a cryptocurrency with a strongly defined purpose – fast and feeless digital payments.
Once you have a purpose for your cryptocurrency, be sure to explain it in a white paper, along with other aspects of your project.
2. Consider the legal implications
As the blockchain space has grown, so has regulatory scrutiny of the space. You want to make sure that everything you’re doing is legal throughout the entire process by consulting with a legal professional.
3. Define a budget
Creating your own cryptocurrency is no easy task and will likely require some financial resources unless you can take care of things like development, documentation, and marketing yourself.
While costs vary from project to project, here is a rough estimate of what you can expect:
Category Time Cost
Legal Counsel Ongoing $20,000-$100,000+
Development 15 minutes – 6 months+ $0-$100,000+
Whitepaper and Other Documentation 1-2 weeks $5,000-$7,000, or about $500/page
Security Audit 1 month $3,000-$10,000+
Marketing Promotion 1 month – 3 months+ $10,000/week
Listing (on Sites that List New Projects) 1 month+ $10,000+
Of course, you can do this all yourself for free. However, if you don’t have the necessary expertise, know that sourcing it may cost you.
4. Hire a strong development team
Unless you’re developing your crypto yourself, you’re going to need strong developers to help bring your idea to life. This might be difficult since demand for blockchain developers is through the roof, while supply of skilled blockchain developers remains low. Nevertheless, finding the right team is crucial, since blockchains deal with peoples’ hard earned money and need to be technically sound.
5. Hire external auditors
Found the right developers to create your cryptocurrency? Again, since it’s peoples’ money on the line, you’ll want to double and triple check that your security is top notch. This is where external security audits come in.
MakerDAO, a project that has about $400 million of crypto locked in its smart contracts as of writing, regularly undergoes external security audits.
MakerDAO is the leading DeFi (decentralized finance) application and has seen the value in its ecosystem explode, making it a target for hackers. Image credit: DeFi Pulse
6. Promote your project!
Even though making your cryptocurrency might seem impossible in itself, remember that after you make it, you need to promote it! You could have the best project in the world but if no one knows about it, it’ll be hard to make progress and grow the network.
Press releases, social media – especially channels popular with the crypto community like Twitter, Telegram, Reddit, and Discord, and blogs are a good place to start.
7. Nurture and grow your community
After promoting your project, you need to make sure that you engage with and nurture your community. Answer their questions and provide updates on your progress. Many projects have community management teams for the sole purpose of growing a loyal user base. Your early adopters will become your biggest fans and marketers so don’t neglect them!
How to Create Your Own Token
So in the world of crypto, there are various types of crypto assets. But one distinction people often make is between cryptocurrencies or coins and crypto tokens. Cryptocurrencies or crypto coins are crypto assets that have their own blockchain, or record of transactions. Bitcoin is a prominent example.
Tokens, on the other hand, use another blockchain instead of their own. The most popular example of a token would be the ERC20 token, which are tokens that use the Ethereum (ETH) blockchain.
Why are some assets tokens and not cryptocurrencies or coins? Simply put, it’s a lot easier to build on an already built out platform than it is to build your own. Moreover, what some projects will do is start out on a platform like Ethereum, before migrating to their own blockchain.
This saves a lot of time and money in development costs and also lets a team gauge a project’s potential before investing more into the development of their own blockchain.