More than 17,000 cryptocurrencies are jostling for the attention of investors – but besides the odd few like bitcoin and ethereum, most have failed to make the grade.
Anyone can create a cryptocurrency if they have nerdy technical knowledge, money and helpers.
Investors who want to create a cryptocurrency have a few technical options and legal pitfalls to avoid.
So, keep reading if you want to know how to make your cryptocurrency.
Table of contents
What Does It Take To Mint Crypto?
Anyone can mint crypto if they are ready to commit time, money and some techy knowledge to the process.
Creating a cryptocurrency typically involves one of four options:
- Develop a blockchain from scratch
- Piggy-backing the code of an existing blockchain
- Minting tokens on an existing blockchain
- Hiring a nerd to do the job for you
Developing your crypto is the easy bit. However, marketing and growing your coin takes more time, money and other resources.
Making A Cryptocurrency
Hand rolling your blockchain and cryptocurrency from scratch is hard work and involves extensive training to develop the software skills needed for the project, but there are easier paths.
Creating a blockchain and crypto
If you have the technical skills, you can write your code to bring a new blockchain and crypto token to market.
Building your blockchain puts you in control and offers the freedom to innovate and design, so you get the crypto you want at the end of the project.
Native coins that are hosted on their blockchain are generally better regarded by investors than tokens that rent or buy space on another blockchain.
Creating a blockchain involves:
- Picking the consensus mechanism – You need to choose between ‘proof of work’ and ‘proof of stake’ as a way of verifying the transactions on your blockchain
- Code your blockchain, building in your software protocols, like privacy and transaction security
- Check your blockchain to spot errors and vulnerabilities
- Call in the lawyers to make sure your crypto complies with relevant law and financial regulation
Once your blockchain and crypto back-end is compliant and running as planned, you can mint your new crypto.
Piggy-backing the code of an existing blockchain
Most blockchains are built on open-source software, which is mainly free to download and use. However, open-source can mean code is riddled with bugs, has poor support and is rarely updated.
Taking a blockchain and modifying the code to your specification is an option, but tweaking a blockchain takes time and money, but you do get the product you want.
Not all open-source code is bad – but you get what you pay for in the end.
Once you have finished rewriting your blockchain, you still need to go through the audit and legal checks before minting a token.
Minting tokens on an existing blockchain
This is a soft option. Some cryptos, like Ethereum and Cardano, will host tokens from other developers. Rather than rewrite the blockchain, developers create a new token on the existing software.
You may still need auditors and lawyers, but some blockchains provide this service.
Minting tokens is a quick and easy way to launch a cryptocurrency while becoming part of an established blockchain lends credibility and makes security someone else’s responsibility.
Remember, a coin is a crypto hosted on its own blockchain, while a token is crypto running on someone else’s blockchain.
Hire a developer
If the options don’t match your plans, but you still want to mint a cryptocurrency, hiring a developer is probably the way forward.
Either seek a specialist toting skills for sale or a Blockchain-as-a-Service (BaaS) company that designs custom code.
The big BaaS players include Amazon Web Services, Microsoft Azure, ChainZilla, and Blockstream.
What’s The Cost Of Minting A Crypto?
The bad news is there is no budget for creating a cryptocurrency. The cost depends on the route you take to mint your coins or tokens and how much customisation you have carried out.
The price of developing your cryptocurrency ranges from the sky’s the limit for big BaaS corporations to launching a standard token for free through WalletBuilders on the Ethereum blockchain.
The hidden costs include marketing your initial coin offering, running your crypto business and the ongoing charges for blockchain and transaction services.
Is It Legal To Mint A Crypto?
Creating a coin or token is the point of the cryptocurrency movement. and is legal in most countries.
Some countries have blanket crypto bans, like China, where any activity to create, promote or trade cryptocurrency is against the law.
One of the issues about creating crypto is the tight regulation that some governments impose on securities trading. For instance, the US Securities & Exchange Commission (SEC) is pursuing a Ripple over the launch of XRM.
The SEC claims Ripple traded $1.3 billion of XRM with registering the trades with the SEC.
Cryptocurrency rules and regulations vary between countries, so check out the situation in the country where your crypto is based before your initial coin offering.
To call your cryptocurrency a coin, the crypto must:
– Live on its own blockchain
– Act as a means of payment
– Be accessible for mining
The key factors making a crypto a token are:
– Another blockchain hosts the crypto
– Tokens have a broader use than money and can act as smart contracts
– Tokens are issued rather than mined
A blockchain is a database shared across a peer-to-peer network that stores coin or token transaction data.
A blockchain stores data in blocks, hence the name, whereas a standard database stores information in open-ended tables.
Blocks have a size limit, and once complete, they are closed, and another block is added to the chain.
A consensus mechanism is a real-time protocol for verifying transactions to the coin or token’s blockchain.
This highlights the difference between the blockchain and a database. A database has an administrator to sanction data changes, but the blockchain is a decentralised, unregulated system without an administrator or data controller.
Instead, a blockchain has a consensus mechanism that carries out the same tasks.
Essentially, a consensus mechanism is a set of rules that a transaction must meet before the blockchain adds the details.
Mining and minting are the methods for creating new cryptocurrencies.
Mining is the validation of new coins, generally by solving complex mathematical equations. A new coin is added to a blockchain when an equation is solved. Bitcoins are mined coins. The process is called proof-of-work (PoW).
Minting follows a different validation method called proof-of-stake (PoS). As a result, Ethereum and any tokens hosted on the Ethereum blockchain are minted.
The central repository of open-source software for developing a blockchain is Github’s platform. Open-source software is generally free and comes with permission to edit and add code.
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