Being a crypto fan, you might have considered the idea of creating your own coins. It isn’t as difficult as it seems. Everyone who is familiar with the blockchain will be able to build your own cryptocurrency.
Before you go any further, you may need some guidance. Let us give you a good piece of idea about crypto.
What is a Cryptocurrency?
Cryptocurrency or crypto is a decentralized digital form of money based on encryption techniques. It aims to manage the generation of currency units and verify the transfer of funds. Its main features include anonymity, decentralization, and security.
The number of crypto coins is constantly growing. Currently, there are more than 1,600 assets, including Bitcoin, Ethereum, Litecoin, DOGE, etc.
How Does a Cryptocurrency Work?
Cryptocurrency is an integral element of the blockchain. It is based on the consensus algorithms managing the development of new blocks – with PoW (proof-of-work), PoS (proof-of-stake), DPoS (delegated proof-of-stake), PoA (proof-of-authority), etc.
A new crypto coin appears every time a new block is created. And it is used as a reward and incentive for blockchain members who are involved in the consensus mechanism. As a crypto holder, you can purchase a certain amount of coins and then manage it in any possible way by making transfers between wallets, exchanges for fiat money, and trades with other crypto holders.
Difference Between Coins and Tokens
Cryptocurrencies are represented by two large subcategories — coins and tokens. When thinking about your own crypto project, you should know the difference.
A coin is attached to its own blockchain where all transactions occur. For example, Bitcoin, Ethereum, Neo, and Emercoin.
A token is operating on the existing blockchain infrastructure that verifies its transactions and makes them secure. For example, NEO or Ethereum. Tokens happen to be smart contracts, which represent everything from physical objects to digital services.
Advantages and Disadvantages of Cryptocurrencies
Cryptocurrencies have positive and negative sides. Make sure you are familiar with those before getting down to work.
Decentralization – The blockchain makes cryptocurrency independent from external regulations so that no one can dictate the policies for cryptocurrency developers.
Fast and unlimited transactions – With crypto assets, you can process an unlimited number of transactions. It takes a few minutes to send and receive crypto funds, which is critical in many situations.
Low transaction fees – Cryptocurrency transactions don’t involve any service fees. The amount you need to pay is more reasonable compared to the one offered by banks and credit unions.
Accepted internationally – The sender and the recipient of funds don’t need to be in the same place to complete a crypto transaction. So you can save money on currency conversion and additional charges that usually come up with international transactions.
Transparency and anonymity – Due to the distributed nature of blockchains, every transaction is immune to unauthorized access. Also, no one knows who made a transaction and who received the crypto amount.
Limited acceptance – Crypto remains a subject of discussion in many countries. So the state regulations aren’t well adjusted to crypto transactions.
High volatility – The crypto market isn’t stable, featuring regular ups and downs. It is risky to invest in cryptocurrency, as you can never predict the profitability of your investment.
Non-reversible transactions – By transferring a wrong amount of crypto or transferring an amount of crypto to the wrong person, you can’t cancel the thing. You can try to send a request for a refund, but it isn’t necessarily approved. Then, you can say goodbye to your money.
Crypto storage – Crypto owners may lose their assets by getting their devices broken and forgetting the password.
Is it Worth it to Create Your Own Cryptocurrency?
When you decide to create your own cryptocurrency, you will face some technical issues. You will most likely need some help. Fortunately, you will find more than enough tutorials on the Internet.
You need to have extensive experience in blockchain programming to achieve the goal. Only professionals have sufficient knowledge to walk you through this challenging routine.
You need to have a solid plan for a new cryptocurrency project if you want your coin to stand out. Make sure to use all the available tools to polish your coin to perfection. The result won’t make you wait long!